Immigration Policies Have Helped Boost Your Property Values—But Not Without a Cost

In This Article

Immigration is a particularly contentious issue these days. It came in second amongst Republicans and fifth overall as the most important issue for voters in the 2024 election. (Unsurprisingly, the economy came in first.)

Immigration itself, however, is a broad term and can really be split into (at least) three subgroups: high-skilled immigration, low-skilled immigration, and illegal immigration.

The United States issues about 1 million green cards (legal permanent residence) per year. In 2022, there were 12.7 million lawful permanent residents in the United States, of which about 1 million are granted citizenship each year (after an arduous process). Currently, the foreign-born population in the United States stands at a record, both in terms of the number (51.5 million) and percent of the population (15.6%), with both of those numbers expected to increase in the years to come.

Regarding illegal immigration, the population has moved substantially to the right on this issue over the past few years, with one New York Times poll finding that 55% of voters support “deporting all immigrants who are here illegally.” This includes 32% of Democrats, by the way. Such a policy was once considered extreme, but given the chaos on the southern border in 2022 and 2023, opinions shifted quite dramatically.

This is true even for legal immigration. According to Gallup, in 2021, there was virtual parity between those who wanted to increase immigration and those who wanted to decrease immigration. In June 2024, 55% wanted immigration reduced, versus only 16% who wanted it increased. 

Of course, such a policy would have an enormous effect on the economy. The usually quoted number of 11 million illegal immigrants is almost certainly too low. Indeed, that’s the same number that has been given since the early 2000s! A 2018 Yale study used mathematical models of various demographic data to estimate that there were 22.1 million immigrants living in the country illegally at that time. 

Between 2022 and 2023, the number of migrants illegally crossing the southern border skyrocketed. There were an unprecedented 7.2 million encounters at the southern border, with 1.8 million known and likely millions of unknown “gotaways.” Indeed, it got so bad that even liberal bastions such as New York were complaining about being unable to handle the influx. 

The Congressional Budget Office concluded that “the net immigration of other foreign nationals exceeds that rate by a total of 8.7 million people over the 2021-2026 period.” Thus, in all likelihood, there are somewhere between 25 million and 30 million people living in the United States illegally. 

Deporting at least 5% and possibly almost 10% of your population would be incredibly difficult, prone to abuse, and would almost certainly throw the United States into a recession. (Although it should be noted that the Dominican Republic did something like this in 2024 without much media attention.) Of course, in contrast to the acute problems such deportations would cause the economy, such large levels of illegal immigration can create chronic economic problems, which will be discussed, along with the benefits and costs of legal migration, particularly for the real estate industry.

First, however, we should address Donald Trump’s policies regarding immigration. It will likely aggravate those on both sides of the aisle to say so, but it’s quite clear that most of what Trump’s administration has done thus far is merely theatrical. 

Trump’s Mostly Rhetorical Immigration Crackdown

Dr. Phil tagging along for a televised ICE raid might make for an entertaining (or disturbing?) video, but it’s hardly emblematic of what is currently happening. No, the deep state is not being rooted out, nor is a fascist government being erected. But the 24/7 news cycle is certainly being filled.

In fact—contrary to a fake chart claiming that the daily encounters of migrants at the border were somehow negative—the Trump administration is on pace to deport fewer people in 2025 than the Biden administration did in 2024. The incredible surge happened in 2022 and 2023. In 2024, Biden tightened up border security, which has continued into 2025 under Trump.

In fact, ICE has apparently marked almost every press release of a major immigration raid as “Updated: 01/24/2025,” making any Google search look, depending on your perspective, as if law and order has finally returned or a fascist police state has been erected, while really nothing out of the ordinary has actually taken place. 

For example, I searched “big ICE arrests,” and the second result was a press release from ICE stating, “ICE arrests more than 1,700 during largest-ever nationwide gang surge.” At the bottom, it notes the story was updated on 01/24/2025, but it actually happened on Sept. 30, 2008.

As for Trump’s flurry of executive orders, all of them on immigration have been blocked by injunctions. The most newsworthy one—ending birthright citizenship—while much more defensible than most pundits say (and what’s most common throughout the world) will almost certainly be overturned by the Supreme Court. 

With that out of the way, let us now look at how immigration—both legal and illegal—affects the economy in general and real estate in particular. 

Immigration and the Economy

Right off the bat, immigration’s effects on the economy are muddled by the difficulty of assessing causation. For example, when free-market economist Milton Friedman was making the case for laissez-faire, he would often say how people “vote with their feet.” In other words, people tend to move to places that are doing well economically in search of opportunities. So, countries doing well are (more likely) to seek immigrants, and migrants are more likely to want to go to such countries. 

Thus, almost by definition, countries with a lot of immigration do better economically than countries without. But what is the cause? Does the economy bring immigrants, or do immigrants improve the economy? Both, perhaps? 

More accurately, it depends—both on that country’s situation and regarding whom you are speaking of. As with most things, immigration has both winners and losers.

Ironically, the broad economic effects of immigration are contrary to the economic priorities of the parties that ostensibly want more or less immigration. Republicans tend to prioritize economic growth over equality, which liberalized immigration policies encourage. Democrats prioritize equality and poverty alleviation, which large-scale immigration undermines. (Although, of course, this has nothing to do with the desires of any individual immigrant.) 

There are certainly some exceptions. A good number of those on the libertarian right (like the Cato Institute and the Koch brothers) basically support open borders, and Bernie Sanders, at least used to be, a skeptic, calling “open borders” a “Koch brothers proposal.”

But today, Senator Sanders has moved to where most liberals are. Such liberals tend to discuss the humanitarian aspects of a more open immigration system but also note what some libertarians emphasize: the boon to GDP immigration provides. Free market economist Michael Clemens describes a highly liberalized immigration system as “trillion-dollar bills on the sidewalk”:

“For labor mobility barriers, the estimated gains are often in the range of 50%–150% of world GDP. In fact, existing estimates suggest that even small reductions in the barriers to labor mobility bring enormous gains. In the studies of Table 1, the gains from complete elimination of migration barriers are only realized with epic movements of people—at least half the population of poor countries would need to move to rich countries. But migration need not be that large in order to bring vast gains.”

There’s no doubt that people moving from low-income to high-income countries will boost the GDP of the country being immigrated to, and almost by default, the world GDP as well. However, there’s a lot wrong with this analysis. 

For one, to judge a country’s economic health, we should look at GDP per capita more than GDP in general. If both the population and GDP go up 5%, no one is any better off than before. Second, we should be looking at purchasing power parity, not just GDP. (Poor countries are cheaper to live in than rich countries). 

But more importantly, such economists tend to hold things constant, assuming immigration won’t affect the underlying dynamics of an economy and society. In his paper, Clemens notes that “more than 40% of adults in the poorest quartile of countries ‘would like to move permanently to another country.’” That is over 1 billion people. Would simply relocating them all massively increase GDP? Or would it, more likely, cause the infrastructure to collapse and break the country up into civil war? 

Such destabilizations are not unprecedented. Indeed, the Völkerwanderung of Germanic peoples into the Roman Empire is partially credited by many historians for the collapse of the (Western) Empire in 476. With a more moderate influx, we would likely just see a stress on civil services, which we have seen in multiple states. 

The dynamics of the countries being emigrated from should also be considered. The so-called “brain drain” can harm poor countries as many of their brightest move abroad.

Immigration as a poverty relief mechanism is also woefully inadequate. Roy Beck’s gumball demonstration makes this quite apparent, as even the 1 million immigrants brought into the United States is nowhere near enough to even slightly ameliorate the condition of the 3 billion people worldwide making less than $2 a day. 

The conclusion for rich countries also seems highly questionable. For example, China has seen enormous economic growth—way outpacing the United States—despite having a net immigration rate of –0.1%. 

The same comparison could be made between China and the European Union. 

In addition, we could look at American history, where economic growth was extremely robust during the migration boom of the mid-to-late 19th century, the lull between 1924 and 1965 when immigration was notably restricted, and afterward when it was once again liberalized.

The connection between immigration and economic growth is muddled, to say the least. However, still, most research concludes that increased immigration increases economic output. 

The downstream effects are more notable. A basic analysis of supply and demand would conclude that increasing the supply of something—in this case, labor—would decrease its demand and thereby put downward pressure on wages.

A common complaint from many corporate lobbies is that they “need more labor.” This is most commonly heard regarding STEM professions. But labor is (mostly) like any other good. If you want more labor, you could always raise the price, i.e., wages. Likewise, it shouldn’t be surprising to find that the supposed STEM shortage is a myth.

One could counter that immigrants also become job creators. However, such immigrants would rarely become job creators the moment they stepped off the boat. So, for any equilibrium effect on employment between immigrant employees and employers to be reached, immigration would have to stop (or be reduced) for a period of time. Anne Case and Angus Deaton reluctantly concluded this was plausible in their book Deaths of Despair, which was otherwise pro-immigration.

Indeed, most studies tend to find this effect, but only amongst low-skilled workers and only to a small degree, usually less than 1%.

However, it’s more complicated than this when you dig deeper and look at longer-term effects, particularly in industries with a large percentage of immigrant labor. It’s hard to explain various anomalies, like the fact that slaughterhouses pay 44% less today than they did in 1970, looking at the studies above. Liberal economist Paul Krugman pointed out back in 2006 that it was “intellectually dishonest” to simply say immigrations “‘do the jobs that Americans will not do.’” 

“The willingness of Americans to do a job depends on how much that job pays—and the reason some jobs pay too little to attract native-born Americans is competition from poorly paid immigrants.”

Harvard economist George Borjas’ research has found that “wage trends over the past half-century suggest that a 10% increase in the number of workers with a particular set of skills probably lowers the wage of that group by at least 3%.”

Overall, Borjas found that in 2015, immigration increased the nation’s wealth by $2.1 trillion. However, 98% of that went to the immigrants themselves, leaving the rest of the nation with about $50 billion above what they would have otherwise had. This sounds perfectly fine, except the problem is there was a transfer of $515 billion from native workers to their employers.

There are many reasons why productivity and wages have decoupled, and wages have been relatively flat for many years now. And immigration is by no means the biggest cause. Outsourcing has had a similar effect, and technology is probably the biggest contributor, among many other factors. But immigration has clearly contributed. 

Immigration and Society

A major problem with the immigration debate is that it lumps every immigrant together into one amorphous blob despite the many different attributes of the many different immigrants. Indeed, 148 Nobel Prize winners were immigrants to the United States, as well as the founders or parents of the founders of 46% of Fortune 500 companies. 

On the other hand, all 19 9/11 hijackers were in the country on visas of one sort or the other, and the various ethnic mafias that terrorized many cities throughout much of the 20th century came over in the wave of immigration in the late 19th and early 20th centuries. 

Another problem is that the effects of policy (say, the mess at the border between 2022 and 2023) get blamed on people, namely, the immigrants themselves, who are usually just trying to make a better life for themselves and their families, and nothing to do with whatever nonsense was going on in Washington at the time.

Immigration does open a country up to new cultures, foods, and music, adding to the mosaic of our daily lives. Unfortunately, large-scale immigration likely reduces social capital (people’s network of relationships), at least for a time. If done poorly, it can create ethnic ghettos of what amounts to parallel societies within the same area. 

We saw this in the early 20th century (e.g., Little Italy, Chinatown, etc.). These ethnic groups amalgamated into a more cohesive whole during the mid-to-late 20th century, but today, we again see significant ethnic segregation in most American municipalities. 

Fortunately, in the U.S. at least, immigrants commit substantially less crime than native-born citizens. This even includes illegal immigrants. Unfortunately, part of the reason for this is that immigrants tend to be older than the most criminally inclined cohort (men between the ages of 15 and 25). 

The median age of a green card recipient is 35 years old. What we see with second-generation Americans is that their crime rate is…almost exactly the same as the rest of Americans. 

The median age of an immigrant in the United States is 47 years old versus 37 for native-born Americans. While that’s not a problem in and of itself, it does mean that our already underfunded entitlement systems will be stressed further by large-scale immigration. 

Thus, while legal immigrants tend to have a positive fiscal impact (at least those with a college degree), given the age distribution of new green card recipients, immigration itself won’t help alleviate the large fiscal imbalances we already have once more start retiring. Immigrants who come to the United States unlawfully tend to have a decidedly negative fiscal impact and exacerbate it. 

Immigration and Real Estate

That said, immigration’s effects on the real estate market can—as with the economy in general—be seen in either a positive or negative light. As Lindsay Frankel wrote on BiggerPockets:

“When immigrants move into a community, the demand for housing goes up. The expanded population also supports an increase in economic activity due to more demand for local goods and services. As a result, home values rise.”

One study she cites notes, “An increase in the number of immigrants equal to 1% of an MSA’s total population was linked with a 0.8% increase in rents and a 0.8% increase in home prices.” Furthermore, “[t]his same increase in immigrants was associated with a 1.6% rise in rents and a 9.6% rise in home prices in surrounding MSAs.”

Is this good or bad? Well, it’s good for homeowners and municipalities who see their wealth and property tax receipts go up. On the other hand, it’s bad for renters and aspiring buyers who must pay more for rent and find it more difficult to buy. (It should be noted that homeownership amongst the young is the lowest it has been in many decades, with affordability the primary reason.)

Like with the economy in general, immigration tends to boost economic growth but benefits capital over labor. 

Home prices in the United States have almost doubled in the last 10 years, and indeed, this is a phenomenon that has been seen throughout Europe.

Many European countries have taken in many immigrants in the last decade, but not all of them have. Hungary, for example, took in relatively few, yet was No. 1 in housing price increase at 172.5%. So, this is by no means a 1-to-1 correlation.

There are many reasons for these price increases (including insufficient new construction). Furthermore, something like 34% of construction workers are immigrants, which would make any large-scale deportations slow an increase in new supply that could alleviate high housing prices. 

Final Thoughts

Immigration has a lot of varying effects on an economy, good and bad. Overall, immigration has played an important role in American history, and immigrants have played a valuable role in our society. That said, there are serious costs to large-scale migration that need to be considered when making policy.

The mess at the border in 2022 and 2023 was indefensible, and the border should be secured and illegal immigration curtailed. As for legal immigration, we have experienced one of the largest movements of people in history over three consecutive generations. And now, with artificial intelligence (AI) threatening many jobs among the young and low-income (so far), we should be very concerned about an admittedly yet-to-materialize labor glut that could cause all sorts of economic pain and social problems. 

As an owner of real estate, upward pressure on prices has certainly benefited me personally. But the affordability crisis is causing widespread social harm, and addressing it in multiple ways is, in my judgment, the appropriate response. 

That being said, when it comes to immigration policy, there are many pluses and minuses to consider, and despite the heated rhetoric on both sides, rarely a simple answer. We should all do our best to remember that.