The Wrong Villain

Why blaming immigrants for the housing crisis gets the problem exactly backwards

There is a version of the housing affordability argument that is both true and useful. It goes like this: state and local governments have, for decades, erected a labyrinth of zoning rules, permitting requirements, and regulatory barriers that make it ruinously expensive and time-consuming to build new homes. The result is a supply shortage now estimated at somewhere between 3.7 and 5.5 million units, depending on whose math you use. That shortage is why young people can’t buy homes. Fix the shortage, fix the problem.

That argument is correct. It also happens to be politically inconvenient for a certain strain of Republican politics, which has invested heavily in a different theory: that immigrants are crowding out Americans from the housing market. That theory is simpler, angrier, and substantially wrong. And understanding why it’s wrong actually clarifies what would need to happen to make housing affordable again.

Start with the timeline. Housing costs began their serious climb well before the recent surge in immigration. The Great Recession wiped out a decade of homebuilding. Millions of millennials, the largest generation in American history,hit prime homebuying age in the 2010s carrying debt, thin savings, and memories of 2008, delaying household formation in ways that created enormous pent-up demand. When the pandemic hit, the Fed slashed rates, remote work upended where people wanted to live, and that pent-up demand exploded into a market with virtually no inventory. Rents rose 30 percent. Home prices followed. The surge in housing costs began and accelerated when immigration levels were near their lowest in decades.

That timing problem is a serious one for the immigration theory. If immigrants were the primary driver of housing unaffordability, you’d expect costs to track immigration flows. They don’t. They track millennials, interest rates, and construction deficits.