The surge in illegal immigration into the United States is worsening the country's housing crisis, putting upward pressure on property prices, and contributing to the homelessness problem.
An influx of illegal aliens tends to add to the demand for homes and push up prices, and many cities don't have enough affordable homes or shelters to house the rapidly swelling number of people. As property prices rise because of surging demand, some residents can get priced out of the market, becoming homeless.
Earlier this year, Sen. J.D. Vance (R-Ohio) raised the issue of illegal immigrants straining the housing supply.
“If you think about what it means to have 20 [million] or 25 million undocumented, illegal immigrants in a country, in a situation where we’re not building enough housing ... that puts incredible pressure—you have way more buyers for way fewer homes,” he said during a Senate Banking Committee hearing in February.
“And that puts incredible pressure on homebuyers and people who just want to live a good life.”
Since illegal immigrants tend to have lower education and professional skills, they end up in a lower economic class, and their demand for housing boosts the low-cost rental market.
Soaring housing costs and a shortage of affordable housing have worsened homelessness in recent years.
Mortgage Demand and AffordabilityThe illegal immigrant crisis is happening as high mortgage rates are dampening housing demand. According to data from Freddie Mac, the average weekly interest rate on a 30-year fixed-rate mortgage was 7.18 percent for the week that ended on Sept. 20, compared with 6.29 percent in 2022 and 2.88 percent in 2021.
“Mortgage rates are sitting near a two-decade high, and U.S. home prices rose 3 percent year over year during the four weeks ending Sept. 17, pushing monthly housing payments to an all-time high,” a Sept. 22 statement from real estate brokerage firm Redfin reads.
“Soaring costs have pushed pending home sales down 13 percent from a year ago. The total number of homes for sale is down 16 percent, as many homeowners stay put to keep relatively low mortgage rates.”
Even though the Federal Reserve decided against an interest rate hike at its recent meeting, the central bank indicated that interest rates may remain elevated longer than anticipated—well into 2024. This could keep mortgage rates higher, thus worsening the housing crisis.
Lawrence Yun, chief economist at the National Association of Realtors (NAR), in a Sept. 21 statement, pointed to the issue of tight supply situation in the housing market.
“Home prices continue to march higher despite lower home sales. ... Supply needs to essentially double to moderate home price gains,” Mr. Yun said.
“Home buyers face the most difficult affordability conditions in nearly 40 years because of limited inventory and rising mortgage interest rates,” said Jessica Lautz, NAR's deputy chief economist and vice president of research.
“The impact is exacerbated among first-time buyers, who are more likely to be from underrepresented segments of the population.”
Mortgage payments as a percentage of income rose to 28.5 percent from 14.7 percent during this period, with monthly payments jumping to $2,177 from $1,035.