A Federal Reserve Bank of Dallas working paper has found that the record surge in illegal immigration between 2021 and 2024 drove measurable increases in home prices and rents across U.S. metropolitan areas, offering the most data-intensive accounting yet of how unauthorized migration reshaped local housing markets. The study, which compiled individual immigration court records alongside government administrative data, estimates illegal immigrant worker inflows explained roughly 30% of home-price growth and about 20% of rent growth in the average metropolitan area over that three-year period.
What the Data Show
The core finding is a demand shock, not a wage shock. Researchers found that a 1% increase in unauthorized workers relative to a local labor market's workforce corresponded with approximately a 1% increase in overall employment — a near one-for-one relationship — while producing no measurable downward pressure on wages. The housing side told a different story: that same 1% worker inflow raised local home prices by approximately 2.2% and rents by roughly 1.4%.
The authors attribute the divergence to supply constraints. Housing construction did not expand enough to absorb the additional demand in most markets, amplifying price pressures where inventory was already limited. The researchers characterize the 2021-to-2024 period as an "unprecedented boom" in illegal immigration, citing Congressional Budget Office estimates that net unauthorized immigration added roughly 7 million people to the U.S. population before slowing sharply in mid-2024.
The Employment-Housing Trade-Off
The study's framing matters for the broader policy debate. Democrats have pointed to immigration as a labor-force stabilizer that eased worker shortages; the Dallas Fed paper does not challenge that premise. Illegal immigrant worker flows accounted for roughly 30% of employment growth in the average local labor market between March 2021 and March 2024, the researchers estimate, suggesting the labor-market contribution was real.
The cost, the paper argues, was absorbed disproportionately through housing. American workers whose wages held steady nonetheless faced shelter costs rising at a multiple of the labor inflow itself — the 2.2% home-price response to a 1% worker increase is the number that will define this paper's policy shelf life.
The researchers also found that areas with larger unauthorized-worker inflows recorded declines in government transfer payments, a result they attribute to stronger employment rates and lower safety-net utilization among working-age immigrants — though they acknowledge the finding diverges from some prior survey-based research.
Caveats and Context
The authors are explicit that this is a preliminary draft circulated for professional comment and that its conclusions do not represent the official views of the Federal Reserve Bank of Dallas or the Federal Reserve System. The estimates describe average metropolitan areas and are not presented as a complete explanation of national housing-cost trends.
Still, the methodology — individual immigration court records matched to administrative economic data — gives the paper more granular footing than most prior work in this area. For housing analysts and Fed-watchers alike, the demand-shock framing adds a policy dimension to the affordability crisis that neither side of the immigration debate has fully priced in.