The Fed’s Immigration Paper Shows that Immigration (and Growth) is Good for Homeowners
The new working paper from Daniel J. Wilson and Xiaoqing Zhou, “The Impacts of Unauthorized Immigration on U.S. Labor and Housing Markets: New Evidence from Administrative Microdata,” is going to get dragged into the immigration fight immediately. It is too useful for those who would divide and lay the economic stress of some at the feet of their neighbors while doing nothing to solve the actual problem.
So let’s say the obvious thing first: this paper does not show that immigrants caused a housing crisis. It shows something more interesting, and more important for people who actually care about housing affordability.
From early 2021 to early 2024, the U.S. experienced a large surge in unauthorized immigration, followed by a sharp slowdown beginning in mid-2024. Using newly available data, the authors find that these worker flows increased local employment approximately one-for-one, without significant declines in local wages. At the same time, those inflows raised local house prices and rents, with little evidence that housing supply expanded in response. Immigrants did not "take" housing, but of course they affected the market for housing - the benefit of homeowners and landlords who are in a position to benefit from that growth.
The actual story told by this report is that workers can arrive, employers can hire them, restaurants can staff up, hotels can reopen, construction sites can find crews, families can form households—and the housing market, buried under zoning, permitting, financing, politics, infrastructure limits, neighborhood vetoes, and plain old scarcity, cannot move nearly as fast. Labor supply moves in months. Housing supply moves in years, sometimes decades. And while the dividers are busy saying who is worthy to be a permanent renter in a permanently constricted housing supply and who must go, no one in power seems to be trying to increase peoples access to housing in a way that captures the benefits of this growth.
Growth always lands somewhere
We should stop pretending demand is fake just because supply is the deeper problem. When people come to a place, they need somewhere to live. When jobs come to a place, workers follow. When a community becomes more productive, more attractive, or more necessary to the economy, land becomes more valuable. That is not a moral scandal. That is the basic mechanics of real estate.
The scandal is that our housing system allows the value of growth to flow mostly to people who already own. Existing homeowners get appreciation. Landlords get rent growth. Investors get exposure to scarce housing in strong markets. Renters get the bill. First-time buyers get a moving target. The Fed paper’s estimates are a clean version of this mechanism. An increase in unauthorized immigrant worker flows equal to 1% of initial local employment raised local employment by about 0.96%. The same kind of inflow raised house prices by about 2.2% and rents by about 1.4%. The authors found small and statistically insignificant effects on new permits, which is another way of saying the market did not build its way out in time.
That should sound familiar. We made a similar point in “Housing Doesn’t Have to Be Zero-Sum”: when you increase buying power without adding homes, the savings tend to get capitalized into the price of the same scarce asset. Lower rates, longer mortgages, tax credits, looser borrowing—all of it can help at the margin, but none of it changes the core math if the number of homes is stuck.
The Fed paper is another version of that same math. This time the demand shock is labor and population growth. The outcome is the same: more pressure on homes that are already too few and too expensive.
This will be spun, because everything is
The anti-immigration read will be: immigrants raised rents. The no-problem-here read will be: immigrants boosted employment and did not lower wages. Both are partial truths trying to become whole stories.
The more honest read is this that immigration can be good for local labor markets and still put pressure on housing markets when housing supply is fixed. That is not a contradiction. It is what happens when one part of the economy is flexible and another part is frozen.
The paper also complicates the public-subsidy narrative. Wilson and Zhou find that unauthorized immigrant worker flows significantly reduced government transfers, both in total and per capita. Their IV estimate implies that an increase in unauthorized immigrant worker flows equal to 1% of initial employment lowered government transfer payments per resident by nearly 5%.
So the simple political cartoon does not work. The paper finds more employment, no significant local wage decline, higher rents and house prices (not a degradation of property value, an outsized increase), little short-run housing supply response, and lower government transfers.
The answer is not to make growing places smaller
America’s communities are going to grow. Some will grow because of immigration. Some because of domestic migration. Some because a hospital expands, a university grows, a port gets busier, a factory opens, a sports team invests, a downtown comes back, or a generation of young families decides they still want the old dream with four walls and a yard. Growth is not the enemy. A housing system that excludes workers from ownership is the enemy.
We have said before that the problem for most families is larger than a grant, larger than a tax credit, and larger than closing costs. Monthly payment is what determines whether a household can actually buy and keep a home. That is why traditional down payment assistance, while helpful, is too small and too subsidy-dependent to meet the scale of the problem.
At Homium, we are trying to solve that specific piece of the puzzle. Shared appreciation down payment assistance adds patient, equity-like capital to the home finance stack. It helps a buyer reduce the first mortgage burden without adding a second monthly payment. The homeowner owns the home. The family controls the home. The program is repaid later, when the home is sold or refinanced, from a fair share of appreciation.
Let capital participate by helping families own
There is plenty of capital that wants exposure to American home price appreciation. That demand is not going away. The question is whether it shows up by outbidding families for homes, or by helping families buy them.
A community wealth fund can take the appreciation created in a growing place and recycle it into the next family’s down payment. A city, employer, foundation, health system, university, labor union, or local anchor can sponsor the fund. Homium can originate and service the loans. When loans repay, the capital goes back to work. The result is not a one-time subsidy that disappears at closing, but a self-sustaining cycle of ownership assistance that grows with the community.
That is how we should respond to these findings. Build more homes, reform zoning, speed permits, finance infrastructure, legalize the missing middle, all of it! But while that long fight continues, do not leave working families standing outside the ownership economy, watching appreciation accumulate behind a locked door. Growth raises home values. That's supposed to be a good thing. Growing communities need ownership tools equal to the value they create. The question is whether we keep letting that value belong only to people who already own—or whether we build the tools of dignity that let more families own the upside.
