Fact Check: Examining Immigration’s Impact on Rising U.S. Rental Costs

Immigration has emerged as a focal point in discussions about America’s housing crisis, with claims that record numbers of immigrants are significantly driving up rental costs across the nation. These assertions, which have gained traction in political discourse, demand closer scrutiny as the country navigates both border policy debates and housing affordability challenges.

Economic experts point to a more complex reality behind rising rental prices. While immigration does contribute to housing demand in certain markets, its impact varies substantially by region and operates alongside numerous other critical factors affecting rental costs nationwide.

“Immigration is just one piece of a much larger housing affordability puzzle,” explains Dr. Jenny Rodriguez, senior housing economist at the Urban Policy Institute. “When we examine the data, we see that rental increases are driven by a constellation of factors including zoning restrictions, construction costs, and investment patterns that long predate recent immigration trends.”

Research from the National Housing Coalition indicates that America’s housing shortage began developing well before recent immigration surges. The country faces an estimated deficit of 3.8 million housing units, the culmination of more than a decade of underbuilding following the 2008 financial crisis. During this period, construction of new housing units consistently failed to keep pace with population growth and household formation.

In high-cost coastal markets like San Francisco and New York, restrictive zoning laws have severely limited housing development for decades. These regulations often prohibit multi-family dwellings in large portions of metropolitan areas, creating artificial scarcity that drives prices upward regardless of immigration patterns.

“Local housing policies frequently determine affordability more than national immigration trends,” notes Roberto Sanchez, a real estate economist at Columbia University. “Communities that have embraced higher-density development have generally maintained better affordability, even in regions with significant immigrant populations.”

The pandemic also dramatically reshaped housing markets nationwide. Remote work policies triggered migration to previously lower-cost areas, while construction delays and supply chain issues restricted new housing supply. Simultaneously, institutional investors purchased significant portions of available housing stock, particularly in growing metropolitan areas across the Sun Belt.

A Federal Reserve Bank analysis found that corporate and institutional ownership of residential properties increased by 29% between 2019 and 2022, adding competitive pressure to housing markets already experiencing supply constraints.

“When large investment firms purchase thousands of homes and apartments as financial assets, this fundamentally alters market dynamics,” says Patricia Morgan, director of housing policy at the Economic Policy Center. “This trend accelerated during the pandemic and continues to influence rental prices in many communities.”

In regions with high immigrant populations, housing demand does increase accordingly, but research suggests this impact is often moderated by other factors. Immigrant households frequently demonstrate different housing patterns than native-born residents, with higher rates of multigenerational living arrangements and greater willingness to accept higher-density housing options.

A study from the Migration Policy Institute found that recent immigrants typically occupy a distinct segment of the rental market, often in neighborhoods with older housing stock or in areas undergoing transition. This suggests that while immigration contributes to overall housing demand, its effect is not uniformly distributed across all rental markets.

Housing experts emphasize that addressing America’s rental affordability crisis requires comprehensive solutions rather than focusing exclusively on immigration. Expanded construction of multi-family housing, reform of restrictive zoning codes, and policies addressing corporate ownership of residential properties would likely have more immediate impacts on rental affordability.

“The fundamental challenge is that we simply haven’t built enough housing where people want to live,” explains James Wilson, chief economist at the National Association of Home Builders. “While population growth from any source increases housing demand, the primary issue remains our collective failure to create sufficient housing supply over the past fifteen years.”

As debates about immigration and housing continue, economists urge policymakers and citizens to consider the multifaceted nature of rental market dynamics rather than seeking simple explanations for complex economic challenges. Addressing America’s housing affordability crisis will require nuanced approaches that acknowledge both the diverse factors driving costs and the varied experiences of communities across the nation.