Do illegal aliens drive up housing costs? It gets complicated
Logansport, Indiana, seems like the perfect place to test Donald Trump’s claim that an influx of migrants is a major reason housing prices and rents are soaring in America. The heartland town with a population of 18,200 has seen an influx of between 2,000 and 5,000 Haitian immigrants during the last few years, all of whom need a place to lay their heads. While home prices in Logansport have increased 41% since 2019 — compared with 35% nationally – it’s difficult to find an elected official or real estate professional who faults the newcomers for the surge.
Mayor Chris Martin said flat-out that immigration isn’t to blame. Toni Gephardt, broker-owner of Pacesetters Real Estate, agreed. Gephardt said that even though fitting into the community hasn’t always gone smoothly for the Haitians, many of whom work at the local Tyson Foods plant, the immigrants aren’t responsible for real estate getting more expensive. “Prices have gradually been going up because of the lack of housing in our area, but that started even before the Haitians got here,” she said. “I don’t think it has anything to do with them.”
Part of the reason, they say, is that the demand for housing Haitian immigrants is mitigated by their living arrangements: Many who have recently settled in Logansport have responded to the problem by doubling and tripling up, with as many as two dozen people sharing a rental, a pattern that’s playing out in communities around the country. Logansport underscores some of the complex factors that challenge Trump’s assertion, which Vice President J.D. Vance expressed this way at his Oct. 1 debate with Tim Walz: “You’ve got housing that is totally unaffordable because we brought in millions of illegal immigrants to compete with Americans for scarce homes.”
An RCI analysis of the impact of migrants on housing prices found no definitive answers. One obstacle was the fact that the government doesn’t offer reliable data on where migrants live, and this is not a question economists have studied with much rigor. But the larger issue, as Logansport suggests, is that real estate depends on so many local factors that it is hard to make sweeping claims.
As a matter of common sense, the estimated 8 million migrants that came to the U.S. between 2021 and 2023 – the largest surge in American history – would place upward pressure on housing. These migrants have arrived at a time when demand for housing has gotten so acute that, according to Freddie Mac, developers would have to build 1.5 million homes – a conservative estimate – for supply to catch up. The imbalance between supply and demand has boosted prices. Nationally, the year-over-year median price tag for an existing home has climbed for 16 straight months. In November, it hit $407,200.
Rents are up, too – 27% nationally since 2019. Juxtapose that with wage gains of only 20% in the U.S. over the same time period, and it’s easy to see why the issue elbowed its way into the 2024 presidential campaign.
The newcomers are straining communities across the country. In San Francisco, an average of 150 new students have enrolled in public schools every month this year. New York City spent $4.3 billion over two years to comply with state and local “right to shelter” requirements, a situation that Mayor Eric Adams has said “will destroy” the largest U.S. city; in Utah, residents have left flyers at the border to warn migrants to move on because motels are full and food banks are empty.
In Aurora, Colorado, members of Venezuela’s Tren de Aragua criminal organization terrorized tenants of an affordable apartment complex, brandishing semi-automatic weapons, beating up a landlord, and recruiting young men to join their gang. The trouble got so bad that Trump dubbed his mass deportation plan “Operation Aurora.” The organization has been tied to killings in Connecticut and robberies and sex trafficking operations in New York City, too.
The migrants’ impact on housing, however, is harder to measure because real estate is all about location, location, location. What’s true from a national perspective isn’t necessarily what’s going on in neighborhoods. Many of the new immigrants are landing in places like Logansport, Charleroi, Penn., and Springfield, Ohio – cities whose populations have shrunk in the last 50 years. In other words, they’ve flocked to locations where a little lift in property values wouldn’t be so bad, but rather an indication of a neighborhood comeback.
In Charleroi, for example, one in four homes there stood vacant in 2020. Today’s average home price, $106,100, is three and a half times lower than the county average. In this southwestern Pennsylvania town, population 4,233, with a median household income a little more than half the national number, Haitians are filling gaps.
“People don’t want to live in Charleroi,” said one real estate professional who asked that their name not be used because they wanted to avoid any fallout, political or otherwise. “It’s different from the southern border, where people are sick of illegals coming across the border. Charleroi is not the same situation. These immigrants are legal.”
More than 800,000 immigrants, most of them from Venezuela (344,335) and Haiti (200,005), are legal but not permanent residents of the U.S. because the government granted them Temporary Protected Status due to the chaos and violence in their home countries.
Trump has promised to make it illegal for undocumented immigrants to get a mortgage. Today, it’s legal but rare. The Urban Institute estimates that as many as 6,000 illegal immigrants have secured home loans; there are more than 85 million outstanding mortgages in the U.S.
Academic research conducted in 2007 by Albert Saiz, now a professor at the MIT Center for Real Estate, comes closest to supporting Trump and Vance’s assertion that the immigrant influx has boosted property prices. His conclusion, based on modeling – that an increase in immigration equal to 1% of the existing population leads to an increase of roughly 1% in housing costs – has been widely circulated to support the Republicans’ position.
Saiz, however, told RCI that using mass deportation as a solution to rising property values was “inane.”
Deportations are “obviously not a real estate policy,” Saiz said. “As a housing policy, it’s just a red herring that’s not really an issue with developers or researchers or policymakers. It’s not even a top 10 item in terms of housing policy.”
The effect of immigration on housing prices isn’t enough to account for the nationwide rise in prices, Saiz said. The increase in immigration flows, he said, hasn’t even made up for declining growth among the U.S.’s native-born population. The U.S. birth rate of 1.66 births per woman has been below “replacement levels” since 2007.
Vance “might be technically right that immigration affects housing affordability, but with having more children, a policy he advocates, you’re also going to have higher housing prices,” Saiz said. “Is that an argument for not having children? Obviously not.” He concluded: “Mass deportation won’t change the trajectory of housing affordability.”
What will?
Jon Melchi cites the “Big Four” factors that make housing broadly available: laws, land, lending, and labor. While economic conditions vary from location to location, the Big Four transcend geography. They explain why construction isn’t keeping up with demand in Melchi’s Columbus, Ohio, and across the country – regulations that can add 24% to the expense of building a new house, a scarcity of prime locations available, construction loans that cost too much, and a shortage of more than half-a-million workers, skilled and unskilled, immigrant and native-born.
“The Columbus region has been an unheralded economic-growth story for some time,” said Melchi, executive director of the Building Industry Association of Central Ohio, a region that includes Springfield, where both Trump and Vance said, with scant evidence, that recent immigrants were eating Americans’ pets. Melchi warned that the lack of affordable housing for new workers threatens Columbus’ winning streak. “A home is where a job goes at night,” Melchi said. “We should be building about 19,000 homes a year here, and we’re only building about 12,000.”
Bolstering the supply side of housing means finding workers to build enough houses. Because mass deportation would cast a wide, indiscriminate net, there’s a danger of the operation depleting the pool of construction workers, 30% of whom, or about 1 million people, are immigrants. That would have the opposite effect on real estate than the incoming Trump administration intends, said Anirban Basu, chief economist for Associated Builders and Contractors, a 23,000-member trade group that endorsed Trump for president.
“Economically, if there’s an attempt to deport these workers and also, attendant with that, punish employers more aggressively for using undocumented workers, then these workers no longer become accessible to the building industry,” Basu said. “That would massively shrink the construction workforce and would substantially increase the cost of housing, which already has an affordability problem.”
That’s an argument for using deportation in a more nuanced way, Basu said. Few Americans, for instance, would argue against the removal of criminals, such as members of Tren de Aragua, the organized crime group from Venezuela.
Lax immigration enforcement has allowed them to spread their tentacles to 16 states, according to a report in the New York Post. In November, three suspected members were arrested and charged with murder in Texas; another trio was detained for alleged larceny at Tyson’s Galleria in Northern Virginia; they were accused of recruiting young men, calling them “Little Devils of 42nd Street,” in New York City; police in Tennessee took a suspected member into custody for alleged sex trafficking; and a suspected member was arrested after a violent incident at the Dolphin Mall in South Florida.
The complexities of the issue are apparent in the Denver suburb of Aurora, where migrants have driven down rents for all the wrong reasons. Tren de Aragua is preying on other Venezuelan immigrants and driving rents down because few people are brave enough or broke enough to move in where the gang holds sway, said Danielle Jurinsky, an Aurora council member. “I have landlords reaching out to me because they have a hard time renting their properties,” she said.
Realtor.com said that rents fell in Denver more than in any city in the country in October – 5.6% year over year, with the median price of a studio, one- or two-bedroom apartment dropping to $1,836 a month.
One landlord said that the influx of immigrants was at least partly responsible for the lower rents.
Denver took in a lot of immigrants, said the landlord, who asked that their name not be used. “Too many people move into an area and the people who are already living there see what’s going on,” they said. “They don’t want to be among people who aren’t like them, so if they have the means, they move out.” The landlord said a state law made it nearly impossible to evict immigrants who were living 15 to a one-bedroom, as they were in Aurora. “Many landlords are dying to sell and get out of Colorado,” they said.
Back in Logansport, a rural hub where Hoosiers come from smaller towns to shop at Walmart, property values have doubled since 2017 – to $144,487, according to Zillow. Gephardt, the real estate broker, says she recently sold a house to an immigrant couple who paid $60,000 cash. “They’ve been in this country for a long time,” Gephardt said. Migrants with the proper paperwork are “able to do everything we do.”
“I feel like the news is giving the immigrants a rough time right now and I don’t think that’s necessarily needed,” Gephardt added. “They make it sound more negative than it needs to be.”