As more studies continue to show causation between immigration and skyrocketing housing prices, a March working paper from the Federal Reserve Bank of Dallas shows illegal immigration drove up Americans’ housing prices and rent costs while deflating the value of their paychecks.
During an unprecedented boom of undocumented border crossings between 2021 and 2024, the Fed Reserve paper found that approximately 7 million unauthorized immigrants entered the United States at double the rate of legal immigration, directly affecting the cost of living and working wages for everyday Americans. (While this study puts the number of illegals that entered the country at 7 million, other estimates show it was far higher.)
“The influx of these immigrant workers acted as a positive supply shock to local labor markets, it acted simultaneously as a demand shock to local housing markets, boosting rents given relatively inelastic short-run housing supply,” noted paper authors Daniel J. Wilson and Xiaoqing Zhou.
The authors also noted that the majority of illegal immigrants tend to be a lower-skilled, lower-educated demographic, who take on labor for lower payment. Illegal aliens accounted for nearly a third of the overall increase in employment, the paper found.
Additionally, the authors discovered that for every 1 percent increase in illegal immigration “equal to 1% of a local area’s initial employment,” home prices increased by 2.2 percent, rent grew by 1.4 percent, and wages decreased by 0.87 percent, and 0.7 for the average American. This means illegal immigration is responsible for “about 30% of the total growth in house prices and 20% of total growth in rents over the boom period for the average local market.”
Though the study found that employment in the construction industry increased because of the influx of illegal aliens, there was no correlation between that increase and new construction of housing. “We find that unauthorized immigrant worker flows increased local house prices and rents, without significantly expanding new housing supply,” the study reads.
In sum native working-class renters faced decreasing wages as illegal aliens flooded into the job market, and they also took the brunt of the housing cost increase as demand for apartments and multi-family housing grew.
Notably, the Federal Reserve paper’s author found “a stark slowdown” in illegal immigration coinciding with the Trump administration taking power. The flow of illegal immigration became “negative by February 2025,” the authors noted, and the “places with the largest unauthorized worker inflows during the boom also experienced the largest subsequent outflows.” The reversal hints at potential relief for the Americans who bore the financial burden of Democrat open-border policies.
The Fed Reserve paper reports what others in the research community have been warning about for the past several years. Dr. Steven Camarota, director of research for the Center for Immigration Studies, testified in multiple congressional hearings during the Biden border crisis, detailing the damaging effects of illegal immigration underscored by the high participation of illegal aliens in rental properties and government welfare programs.
In his prepared testimony from 2024, “The Consequences of Illegal Immigration for Housing Affordability, Government Budgets, and American Workers,” Camarota stated: “The negative fiscal impact of illegal immigrants — taxes paid minus benefits received — is primarily due [to] their modest average education level.
“Some 69 percent of adult illegal immigrants are estimated to have no education beyond high school, which is double the U.S.-born share,” Camarota testified. “This results in relatively low average incomes and tax payments, along with significant use of welfare. … Other researchers point to overly generous welfare and disability programs that undermine work.”
Camarota examined the use of welfare programs, including the Earned Income Tax Credit (EITC), Women, Infants, and Children benefits (WIC), Supplemental Nutrition Assistance Program (SNAP), and Medicaid. He found that 59 percent of illegal immigrants used welfare programs and 39 percent used Medicaid. In contrast, 39 percent of U.S. born citizens utilized welfare in some form, and 25 percent made use of Medicaid.
“Federal expenditures on these programs total $817 billion,” and “states spent an additional $226 billion on Medicaid,” Camarota said at the time. “If we wish to reduce the cost associated with illegal immigrants’ use of means-tested programs, we need to enforce the law and reduce the number of illegal immigrants in the country. If they are allowed to remain, the welfare costs will remain too.”
A study from the Federation for American Immigration Reform (FAIR) found that in total, illegal immigrants cost American taxpayers at least $150.7 billion dollars annually.
Harvard professor George J. Borjas also noted the collateral damage of open borders in 2013 when he found that illegal immigration — though it increased the gross domestic product — reduced “the wage of native workers by an estimated $99 to $118 billion a year.” But aside from the rare reference, such as a recent op-ed published in The Wall Street Journal, corporate media have largely ignored research demonstrating that working-class Americans are taking the brunt of mass migration when it comes to housing affordability, wages, and access to welfare programs.
