Market Insights

How Immigration Shapes the U.S. Housing Market - How Trump's 2025 Policies Are Shaping the Housing Market

February 1, 2025• 9 min read

In December 2023 alone, approximately 300,000 migrants entered the United States through the southern border — more than three times the pre-2020 monthly average. Immigration courts are overwhelmed. Several major cities are struggling to provide adequate housing and services. What's driving this increase, and what does it mean for the U.S. economy and real estate market?

The United States as an Immigration Destination

The United States has more immigrants than any other country in the world. More than 40 million people living here were born abroad — approximately one-fifth of all migrants on earth. This population is exceptionally diverse, representing virtually every country, which sets the U.S. apart from every other nation.

Immigrants are statistically more likely to be of working age than the native-born population, which means they enter the labor force at higher rates and contribute to the economy both as consumers and as taxpayers — funding programs like Medicare and Social Security.

Recent data shows that immigrants' share of the residential real estate market has surpassed $6 trillion — approximately 12% of the total $47 trillion residential market.

What Happens to Housing When Immigrants Arrive

When immigrants move into a community, housing demand increases. Population growth also drives demand for local goods and services, which supports commercial real estate — retail, industrial, and multifamily housing.

Research consistently shows, however, that immigrants don't tend to settle in already-expensive, high-demand markets. They gravitate toward areas that have experienced economic decline, where housing is more affordable. In these areas, immigration stabilizes prices and revitalizes communities — rather than adding upward pressure to already-overheated markets.

Chicago and surrounding Cook County are a clear example: immigration prevented population decline and kept housing prices relatively stable. In New York, peripheral neighborhoods in the Bronx and Queens — once in demographic decline — were stabilized and revitalized by immigrant populations. The same pattern appeared in neighborhoods of San Francisco and Atlanta that were previously considered undesirable.

For real estate investors, this dynamic creates a specific opportunity: target areas where immigration trends are increasing before appreciation catches up. A 2017 study found that a 1% increase in a city's population due to immigration correlated with a 0.8% increase in both rent prices and home values. In surrounding metro areas, the effect was even larger — 1.6% in rents and 9.6% in home values.

What Would Reversal Look Like?

The Cato Institute — a nonpartisan American think tank — estimates that deporting 10 million undocumented immigrants would result in the loss of approximately $1 trillion in U.S. housing wealth.

There is historical evidence for this. In 2007, Arizona implemented strict enforcement measures against undocumented workers, leading to the departure of approximately 100,000 residents. During the resulting population decline, rental vacancy rates surged from 9.8% to 16.8%.

A federal immigration crackdown that began in 2008 and expanded nationally in 2013 resulted in the deportation of more than 400,000 undocumented immigrants and measurable job losses in the construction trade. Three years later, the impact on residential construction was clear: the median county saw more than 1,000 fewer new homes come to market, and the average cost of newly constructed homes rose by $50,000 above the baseline.

The Construction Labor Connection

Labor shortages in the construction industry have been among the most significant constraints on housing supply in recent years. As of January 2024, there were 422,000 open construction jobs — nearly triple the number available a decade ago. More than 20% of construction workers are over 55 and approaching retirement, while fewer young people are entering the trades despite increasing wages.

Immigrant workers have filled a growing share of this gap. In 2022, they held approximately 25% of all construction jobs — a record high — and about 31% of all positions in the building trades.

Mass deportation or significant immigration restrictions would worsen these labor shortages, slow new construction, and push home prices higher in already supply-constrained markets. This is not a theoretical concern — it's what the 2008–2013 enforcement data showed.

The Cost to Taxpayers

There is a legitimate concern about the cost of integrating new arrivals, particularly undocumented ones. New York City entered into emergency contracts worth more than $7 billion to provide temporary housing, healthcare, and other services for asylum seekers. Chicago estimated it would need an additional $321 million in 2024 to cover services for new arrivals. Boston and other cities have spent millions providing housing through nonprofits, with per-room costs ranging from $1,100 to $3,000.

The Cato Institute's research also finds, however, that immigrants' long-term tax contributions exceed the cost of the support programs they access, on average. Most undocumented immigrants don't individually qualify for federal benefit programs, though their children may in some cases.

A 2021 Survey of Income and Program Participation found that while 18.8% of adult respondents were foreign-born, they accounted for 18.8% or less of recipients of SSI, TANF, and SNAP. Their participation in the WIC program was higher, at about 31%.

According to Pew Research, immigrant households generally have lower wealth than native-born households — but higher upward mobility. Immigrants who arrived before 1990 and have been here long-term have, on average, greater median wealth than native-born Americans. The children of immigrants consistently outperform in economic outcomes.

The Labor Market Reality

Anti-immigration rhetoric frequently argues that immigrants take jobs from native-born workers. Research does not support this.

Immigrants are more likely to start businesses — including both small local operations and large corporations — creating jobs rather than simply taking them. Immigrant-founded businesses tend to pay higher wages than comparable native-founded businesses.

Immigrant workers have helped sustain industries where native-born workers are declining, particularly manufacturing and construction. They have contributed to record-low unemployment rates. There is no substantial evidence that immigration threatens overall employment.

On wages: some argue that immigrants suppress wages by accepting less. But regions with high immigrant concentrations have seen per-capita income rise. Research suggests immigrant workers actually enhance the productivity of higher-level workers — boosting rather than reducing overall wages, per Brookings Institution analysis.

The Systemic Issue

The fundamental problem in the current situation isn't immigration itself — it's the mismatch between the volume of arrivals and the capacity to process them legally and integrate them into the workforce.

Border patrol staffing is at all-time highs. Enforcement actions are at record levels. The Biden administration's 2025 budget proposal allocated an additional $25 billion for Customs and Border Protection and Immigration and Customs Enforcement. The issue isn't a lack of enforcement — it's that immigration courts face a backlog of nearly 35 million green card applications, creating years-long delays that leave people in limbo rather than working legally.

Many advocates — including Denver's mayor — argue that more work authorizations and faster paths to temporary legal status would cost the city less and benefit the economy more than the current system, in which new arrivals are housed at public expense while waiting for bureaucratic processes that move at a fraction of the required pace.

High immigration, when integrated successfully into the workforce, benefits communities and taxpayers. The harm comes from a system that keeps people out of the legal economy for years while requiring public support in the meantime.

What This Means for Real Estate Investors

Immigration trends are a useful input for location-based investment decisions. Areas receiving new immigrant populations — particularly in secondary and tertiary markets where existing residents have been declining — often see housing demand stabilize and appreciate in ways that aren't yet reflected in prices.

Conversely, policies that significantly reduce immigration could suppress demand and reduce housing values in markets that depend on population growth. Both directions of this dynamic create opportunities for investors who pay attention to the underlying demographics rather than just the surface-level price movements.

The relationship between immigration and real estate is complex, politically charged, and often discussed with more heat than data. The data, on balance, points in a clear direction: immigration broadly supports housing demand, workforce capacity, and economic growth — and its reversal carries real costs.