To Fix the Affordable Housing Shortage, Policymakers Should Support Smarter Housing Policies Instead of Using Immigration to Evade Responsibility

Experts, policymakers, and renters and prospective home buyers all recognize that the United States lacks sufficient affordable housing. Nearly half of rental households pay over 30 percent of their income on housing costs, and the median monthly cost of owning a home reached an estimated $3,000 in 2023. Rent prices have risen over 100 percentage points more than inflation since 1984, and home prices increased nearly 500 percent in the same period. Construction of new homes has also dropped over 50 percent since 2007.

The Biden-Harris administration has taken multiple steps to increase Americans’ access to affordable housing. The administration has made $100 million in funding available in grants to communities to break down barriers to creating affordable housing, including by amending land use regulations; enhanced a program to provide greater predictability about interest rates to state and local agencies that use federal funds to finance construction of new housing projects; and taken executive action to expedite housing construction permitting and allow more types of homes to be built under federal housing codes, among other actions.

There is no evidence to suggest immigration has caused the shortage in affordable housing. In fact, immigrants play a critical role in the construction labor force necessary to increase the supply of homes, and mass deportation of undocumented immigrant workers would be completely counterproductive to the goal of increasing the supply of affordable housing. Innovative policies that further expand the availability of affordable housing are the only way to effectively solve the country’s housing shortage.

Immigration has not contributed to the housing shortage, but may be key to solving it

Americans’ difficulty finding affordable housing is not attributable to immigration. If this difficulty was based on immigration, we would expect large increases in housing costs to be positively correlated with increases in the number of foreign-born workers in the labor force, since income is needed to pay for housing. That correlation does not exist. While the number of foreign-born workers has trended upward since 2014, it has not tracked with changes in housing costs. This is clear from data comparing house price growth to changes in the number of foreign-born workers in the labor force.

Figure 1 charts the year-on-year percentage growth of the CoreLogic national home price index, together with the number of foreign-born workers in the labor force since 2014. This data reveals several important facts:

• During 2014–2020, the number of foreign-born workers rose, but home price inflation remained relatively constant.
• After the 2020 recession, home prices increased dramatically, while the number of foreign-born workers declined.
• The number of foreign-born workers did not return to its prerecession value until November 2021, after rapid price increases began.
• In April 2022, the rate of growth of home prices began to decline sharply, although the number of foreign-born workers continued to rise.
• As the number of foreign-born workers rose through 2024, the rate of increase in home prices fell below levels observed since 2014, when the number of foreign-born workers was significantly lower.

With regard to renters, data from the Bureau of Labor Statistics for the past decade reveals a similar pattern. As Figure 2 shows, prior to the COVID-19 pandemic, the year-on-year percentage change in the average rent price for someone signing a new lease remained relatively stable, while the number of foreign-born workers rose gradually. Then, in the past four years, rent prices began increasing in the second quarter of 2021, peaked in the second quarter of 2022, and started to fall after that. However, the foreign-born U.S. workforce continued to increase in this time period, from around 27 million to more than 32 million. The growth in foreign-born workers is therefore not correlated with a spike in rent prices and attempts to connect immigration to increased rents do not hold up under scrutiny.

Immigration does not explain recent increases in housing costs. Rather, the principal causes of the problem can be traced to numerous factors, including slowdowns in housing supply; pandemic-related demand shifts and supply shocks; and changing market conditions.

Immigrant labor is vital to the creation of more housing that is desperately needed. The construction industry heavily relies on immigrants, who are essential to ensuring Americans have a roof over their heads. Foreign-born workers represent approximately one-fourth of the construction workforce, and they are critical to efforts to increase the country’s housing stock. Without these workers, the construction industry may experience a dire labor shortage, reducing the supply of homes and making owning a home or renting an affordable apartment more challenging. For generations, immigrants have also revitalized and stabilized American communities from midsize cities to rural areas, making communities more resilient by driving economic growth, helping preserve key industries, and growing the local tax base.

Misguided policies would make the affordable housing shortage worse

Rather than attempting to shift the blame for the shortage of affordable housing, policymakers should focus on proactive solutions to expand housing availability and affordability for all Americans. Unfortunately, some politicians have proposed housing policies that would do little to solve the issue and instead perpetuate the lack of housing availability and affordability. In 2023, the Limit, Save, Grow Act (H.R. 2811)—the House majority’s debt ceiling bill—proposed cutting federal discretionary spending for programs such as the Section 8 Housing Choice Voucher program, which subsidizes rent for low-income Americans struggling to keep a roof over their heads. The U.S. Department of Housing and Urban Development (HUD) estimated the proposed cut in voucher funding would have led to 640,000 fewer Americans being able to afford their rent, which would have exacerbated the affordable housing shortage.

More recently, House majority proposals for HUD’s fiscal year 2025 budget included a $2.3 billion cut to its funding, including a 60 percent cut in programs to invest in new housing developments. Finally, extreme conservative policy proposals, such as Project 2025, would impose work requirements and time limits on housing assistance programs. These harmful proposals would make it harder for Americans to afford rent or mortgage payments and further exacerbate the housing shortage. Instead, in order to solve this shortage, the country needs creative, government-driven solutions that make housing more affordable for all Americans.

Concrete steps to make housing more affordable

Lawmakers can enact multiple policies to address the affordable housing shortage. In the short term, the federal government can:

• Expand funding for the Housing Choice Voucher program. This program provides vouchers via Public Housing Agencies to low-income families, the elderly, and the disabled to help them find appropriate housing on the private market. Expanding the program would enable more Americans to have the funds and freedom of choice to select housing that meets their budget.
• Give rental assistance to residents of low-income housing tax credit (LIHTC) units. Each year, the U.S. Treasury Department allocates LIHTC credits to states to create new or refurbished rental housing for low-income residents. Unfortunately, LIHTC units are often still unaffordable to low-income households. For this reason, it is often necessary to combine a Section 8 voucher with a LIHTC unit to achieve affordability. Increasing funding for vouchers that provide rental assistance would ensure more households are able to afford a LIHTC unit.
• Ask Congress to authorize the IRS to permit low-income homeowners to convert tax deductions for mortgages into refundable income tax credits. The current tax structure allows homeowners to deduct interest payments on their mortgage from their total amount of taxable income, but on average, only around 2 percent of households making less than $100,000 utilize this deduction. By allowing homeowners with an annual household income of less than $100,000 to convert these deductions into tax credits, which reduce the amount of tax a person pays, it would give homeowners more money to pay for housing and other budgetary needs.

In the long term, the federal government can:

• Provide funding to state and local governments to construct more affordable rental and home units. As the private sector pushes up prices for housing, incentives for a more affordable marketplace must come from the government to create a lasting shift in the stock of quality housing. Federal programs such as HOME block grants and the Community Development Block Grant (CDBG) programcould be expanded to provide increased capital and technical assistance for development projects across the country to expand supply and lower costs for Americans struggling to put a roof over their heads and prevent companies from charging exorbitant prices for apartments and homes.
• Work with state and local housing authorities on zoning reform. Zoning reform will ensure that future housing developments do not primarily create single-family homes at the expense of other forms of housing. These reforms would help meet the needs of larger and lower-income families by expanding housing development projects to include options such as accessory dwelling units.
• Reform existing programs. The government should work to increase acceptance of housing vouchers by landlords and expand Americans’ eligibility for programs such as vouchers and LIHTC units.

By linking these short- and long-term actions, all Americans would benefit from an effective transition to a more accessible and affordable housing market.

Conclusion

Attempting to use immigration as a means of evading responsibility for America’s housing shortage shows a lack of seriousness about solving the dearth of affordable homes. What we need are real policy solutions that will increase access to affordable housing in both the short- and long-run. The federal government can improve housing access through a combination of policies, including increased subsidies for renters and affordable housing production. Moreover, the federal government can incentivize local cities and counties to amend their land use and zoning regulations to allow for more housing of all types. Taken together, federal, state, and local actions can boost the housing supply; reduce monthly rents in real terms; and provide greater access to opportunity in the most expensive and economically dynamic regions for millions of Americans struggling to get by.

Acknowledgments

The author would like to thank Marc Jarsulic, senior fellow and chief economist at the Center for American Progress, and Kevin DeGood, director of Infrastructure Policy at the Center for American Progress, for their helpful contributions regarding the data analysis and policy recommendations in this piece.