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Immigration Reform’s Impact on Housing

Immigration Reform’s Impact on Housing

Immigration reform is a political hot potato to many. We do not want to take a political stance on the issue. We will leave that to others. However, we do want to report on a recent study released by the Immigration Task Force of the Bipartisan Policy Center (BPC) that spoke to the impact reform would have on the housing market.

The BPC did not claim their study was all encompassing and included the following caveat:

“It is important to note that this analysis is not an endorsement of the Senate bill or any other policy proposal. The study does not examine other aspects of immigration reform including demographic or national security concerns, nor does it look at the cultural benefits that immigrants bring to our communities. Clearly, these issues are important considerations for immigration reform proposals.”

That being said, let’s look at what the study did reveal:

Continue to Drive the Housing Recovery

The study commented strongly on the economic impact reform would bring to housing:

“Immigration reform would dramatically increase demand for housing units. This would increase residential construction spending by an average of $68 billion per year over the 20-year period.” 

The study looked at the effect different policies would have on housing.

Impact of Attrition through Enforcement

Under the “attrition through enforcement” scenario, residential construction spending declined by more than $100 billion per year compared with the baseline, and by more than $175 billion per year compared with the reference case. This is because the removal of all present and future unauthorized immigrants caused a significant decline in the U.S. population. The departure of current unauthorized immigrants would leave many dwellings vacant and the reduction in future population growth would reduce the need to build additional housing units.

Impact of Immigration Reform

“The analysis examined immigration reform’s impact on the housing market…Demand for housing units increases as new immigrants enter the economy and form households, accelerating the current housing recovery and fueling growth in this sector of the economy. Under the reference case, average spending on residential construction increased by about $68 billion per year, with a peak of more than $110 billion per year in FY2022–FY2025. The first decade’s annual average was about $56 billion per year higher, and the second decade’s was about $81 billion.”

The economic impact on housing should not be the only consideration as to whether immigration reform makes sense. But, it is interesting to see the potential outcomes of different policy decisions.

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