Immigration Increases Housing Prices, and That’s Okay

In the October 1 vice-presidential debate, Senator JD Vance (R-OH) said, "Look, in Springfield, Ohio and in communities all across this country … you have got housing that is totally unaffordable because we brought in millions of illegal immigrants to compete with Americans for scarce homes." (Emphasis added.) Vance is correct in saying that immigrants increase the price of houses.

The intersection of supply and demand determines housing prices, like all prices. When housing supply curves are upward-sloping, increased demand from immigrants will increase housing prices. Immigrants are people who want roofs over their heads, after all. Housing supply is relatively inelastic in many places, partly because of government policies like zoning and height restrictions and urban growth boundaries. Land use liberalization could make the housing supply more elastic, but the housing supply will not become perfectly elastic even if all land use laws are abolished. That means that higher demand, all things equal, will drive up prices and the quantity of housing.

Immigrants also induce a housing supply effect because 10 percent of all foreign-born workers labor in the construction industry, which rises to 14.9 percent for noncitizens, according to the 2023 American Community Survey. Only 6.2 percent of native-born Americans work in construction. Estimates show that about 30 percent of all construction workers are immigrants, with higher rates in California, Texas, Florida, New York, New Jersey, and Nevada. Deporting those workers or halting more immigrants will reduce the growth in the housing supply.

However, all immigrants demand housing. Even immigrants who work in construction increase housing demand first before they can construct more housing. That increase in demand drives up prices and incentivizes new supply through further construction, renovation, or increasing the supply of rental units through other means. However, the marginal immigrant increases housing demand more than he increases housing supply.

Read the full analysis: here

If you would like to speak with Alex, please let us know:

Josh Grossman
Cato Institute
Executive Dir. Communications & Marketing
pr@​cato.​org

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.