The Patriot Post® · Immigration and Housing Prices
After vice-presidential nominee J.D. Vance’s speech at the Republican National Convention last week, there have been interesting responses coming from the Right. One important thread I want to focus on is some backlash directed toward Vance by the editor of National Review Online, Philip Klein, about Vance’s attribution of illegal immigration to rising housing prices.
Klein opened his blog post with a sharp criticism of Vance, writing:
J. D. Vance, in accepting the Republican vice-presidential nomination, offered an explanation for the rise in housing prices that made no sense. It’s unclear how much thought even went into it, as it seemed to be more about reverse-engineering an explanation that fit into his worldview than seriously engaging with the problem.
The Thomas L. Rhodes Fellow at the National Review Institute, Dominic Pino, added to the conversation, rightfully noting that big government is a driving force behind rising home prices:
Zoning, environmental regulations, and labor rules all drive up costs. He didn’t mention lumber tariffs, which hurt as well. Deregulation domestically and the removal of trade barriers internationally would go a long way toward reducing housing costs.
For context, Vance said:
The absurd cost of housing is the result of so many failures. And it reveals so much about what’s broken in Washington. I can tell you exactly how it happened. Wall Street barons crashed the economy and American builders went out of business. As tradesmen scrambled for jobs, houses stopped being built. The lack of good jobs, of course, led to stagnant wages. And then the Democrats flooded this country with millions of illegal aliens. So citizens had to compete — with people who shouldn’t even be here — for precious housing.
Klein pointed out that while Vance was factually correct that Wall Street crashed the housing market and that wages have been stagnant, he disagreed that these factors along with the increase in the population of illegal immigrants were measurable drivers of the increase in housing prices. Klein is most certainly correct here. Stagnant wages have made houses less affordable, but they do not account for the skyrocketing cost of housing.
Klein closes his post by making another good point: “homeowners who had locked in low interest rates were more reluctant to sell, which has limited the available inventory” and therefore driven up prices.
Although Klein presents compelling arguments, he summarily dismisses the hypothesis that illegal immigration significantly affects housing prices. “The idea that this has been a measurable driver of higher housing prices is not supported by the data,” he asserts. A more balanced critique might acknowledge the potential impact of immigration, both legal and illegal, on housing markets in various locales.
To be fair, Vance would have been more precise to refer to immigration as a whole, not just that which is unlawful. There is ample evidence that immigration (both legal and illegal) have put measurable upward pressure on housing costs. To avoid going into too much depth on each and every one of the recent studies exploring this, I have compiled a table with papers published from the past five years.
Of the six papers I reviewed, only one found that immigration did not increase housing prices. Virtually all the papers I read though did highlight that the impact varies among localities based on local regulations, and immigration had the largest impacts on districts with the most burdensome regulations. These findings present an opportunity for those like Klein and Pino to hammer home the point that reforming zoning laws and regulations are, in part, a solution to the dilemma Vance described, albeit imprecisely, in his speech.
Instead of simply dismissing Vance’s assertions as mere “economic illiteracy,” a more constructive approach would have been to refine his claims about illegal immigration to encompass the broader impacts of immigration in general.
As previously discussed, post-1965 immigrants and their descendants have contributed over 70 million people to the U.S. population, not counting those who have arrived since 2015. This influx has undoubtedly intensified competition for housing, yet it has also stimulated economic growth and has beneficial effects on the supply side of the economy.
To effectively address the populist concerns that have sharply risen in recent years, it would be advantageous for commentators like the editor of National Review Online and myself to engage thoroughly with the existing research. Such engagement would help us more accurately identify the roots of the widespread anxiety about housing affordability, thus enabling an empathetic and data-driven discussion of populist arguments, like those presented by Vance.
You can reach Caleb at [email protected].