Illegal immigration and the effects on housing costs has taken a front seat following the Vice-Presidential Debate between JD Vance and Tim Walz. During the debate, JD Vance was challenged by the moderators on his claims that illegal immigration is causing a shortage in housing inventory resulting in an increase in demand and prices. JD Vance supported his claims by referencing a Federal Reserve statement that made the assertion “Given the current low inventory of affordable housing, the inflow of new immigrants to some geographic areas could result in upward pressure on rents, as additional housing supply may take time to materialize”.
In a House Oversight Committee testimony on September 25, 2024, Dr. Steven Camarota detailed the consequences of illegal immigration on housing affordability. A focus of Camarota’s testimony focused on the impact of illegal immigration on housing affordability. Camarota noted that “Adding millions of people to the country through immigration drives up the cost of housing and reduces affordability relative to wages in areas of heavy settlement.”
Since January 2021, the Census Bureau shows that about 58% of the increase in immigrant headed households is attributed to illegal immigration. Illegal immigration makes up approximately 1.4 million of the overall estimated 2.4 million increase in immigrant headed households. Research has shown that in the areas in which illegals settle, housing demands increase and drive-up costs. Camarota’s analysis indicates that a “…5- percentage point increase in the recent immigrant share of a metro area’s population is associated with a 12 percent increase in the average U.S.-born household’s rent, relative to their income.” This is not surprising as ”…households headed by an immigrant who arrived between January 2022 to August 2024, 89.5 percent responded they were renters.” When a large number of people are added to the country and localities, the housing demand increases making prices and rent surge. Over the last two years, the country saw the largest increase in rents in a decade. Given the data, it can be deduced that illegal immigration has caused the demand and housing costs to rise, particularly in areas of heavy immigrant settlement.
Dr. Camarota’s testimony on the negative impact of illegal immigration on housing costs is supported by research that dates back to 2007 domestically and internationally. The consensus in these studies is that an increase in immigration increases housing prices and makes housing less affordable. Indirectly, immigration can make housing more costly by reducing wages. If you earn less, your affordability goes down.
The United States is facing a low-income housing affordability crisis. The addition of millions of immigrants stresses an already depleted inventory of affordable housing. According to the National Low Income Housing Coalition, “there is a severe shortage of affordable housing for the lowest-income renters”. 3 It is severe with “…a shortage of 7.3 million rental homes affordable and available to renters with extremely low incomes. To put it into perspective, on average “only 34 affordable and available rental homes exist for every 100 extremely low-income renter households”. Nevada experiences only 14 available affordable housing for every 100 low-income renters to South Dakota where only 57 available affordable housing for every 100 low-income renters. It impacts all states and 50 of the largest metro areas. Of the 50 metro areas, 35 of them have fewer than the average 34 affordable and available rentals for every 100 low-income renters.
The administration has created this man-made housing affordability crisis by allowing illegal immigrants to flood our U.S. borders and pour into our country. The country is already facing an inventory shortage due to the “lock-in effect” of home sellers. They are staying put with low locked in fixed mortgage rates. The shortage of homes for sale created a shortage of rentals as this became the only option for many homebuyers who are eager to get into a home. Similar to the low inventory supply of homes for sale, the increase demand for rentals has caused the rents to skyrocket.
The solution is that the Federal government must stop illegal immigration that makes up most immigrant households. Priority must be given to Americans who are unable to afford a home or rental. Housing costs is a main driver of high inflation. Inflation and economic stability can not be achieved until the Feds and the administration put Americans first and prioritizes the need of our US citizens.
October 5, 2024
By Sophia Georges
Copyright 2024 - Realsophy Real Estate, Sophia Georges
