According to JD Vance, immigration is responsible for the high cost of housing. That's what the experts say.

High housing costs are a serious problem for millions of Americans. Many are excluded from the real estate market due to record high home prices, while others are suffering from rising rents. While Vice Presidential Debate on TuesdaySenator JD Vance pointed to what he believes is a major cause of the affordability crisis: immigration.

“You have housing that is completely unaffordable because we have recruited millions of illegal immigrants to compete with Americans for scarce housing,” Vance said in the debate with his Democratic rival and Minnesota Gov. Kamala Harris' running mate. Tim Waltz.

Specifically, Vance referred to “a Federal Reserve study that we are happy to release after the debate,” which he said “really examines in detail the connection between increased levels of migration, particularly illegal immigration, and higher housing prices.”

On Wednesday, Vance posted several studies and speeches on social media to support his claim, although the Federal Reserve's “study” was actually a short prepared speech by a Fed official who had indicated that the “Influx of New Immigrants” Increases There could be upward pressure on rents in some geographical areas.

A problem from sea to shining sea

While this is far from a rigorous analysis linking immigration to higher home prices, many economists who have studied the housing market say the factors driving up home prices are structural, such as a downturn in the Construction following the Great Recession of 2007-09, which led to a severe housing shortage. In contrast, the role of immigrants in driving up housing prices is not so clear.

However, it is evident that house prices have increased by 53% since January 2020, just before the pandemic, driving many potential home buyers out of the market. And since rents have risen by 25% over the same period, half of all tenants are now considered “cost-burdened.” According to the Harvard Joint Center for Housing Studies, this means a record share of renters are now spending more than 30% of their income on housing.

“Many people thought the affordability crisis was limited to larger cities, and that has really changed in the last few years — people all over the country are struggling with affordability issues,” said Shamus Roller, executive director of the National Housing Law Project, an affordable housing advocacy group Housing, CBS MoneyWatch said. “It’s driving the economic anxiety that many people across the country are feeling.”

What is driving up real estate prices?

The reasons for the skyrocketing housing costs lie primarily in major problems in the real estate market. The biggest factor: a long-standing shortage of new construction in the decade following the 2007 U.S. housing crash and the global financial crisis that followed.

“The housing shortage is the root cause of our affordability crisis,” Zillow chief economist Skylar Olsen said in an email to CBS MoneyWatch. “The simple fact is that there is not enough housing in this country where and how it is needed. This results in housing costs exceeding the ability of a typical household to pay.”

At the same time, the Millennial generation has reached the prime age to buy their first home, increasing demand for housing. Yet baby boomers still largely live in their own homes, contributing to the supply shortage. One economist even has Boomer accused for the affordability crisis as the generation divorces and continues to form new households, increasing competition for real estate with Millennials and younger Americans.

The pandemic, which has seen mortgage rates plunge to record lows and many Americans shift to remote work, has also “sparked a home-buying frenzy,” further restricting supply and driving up home prices, Olsen said.

“The rise in prices during the pandemic housing boom was due to a confluence of trends that have little to do with immigration, including extremely low mortgage rates that made it more affordable for many to buy their first home,” she said.

Still, there is evidence that increasing immigration may increase rental costs, even if only slightly. For example, a 2017 study found that a 1% increase in a city's population due to immigration leads to a 0.8% increase in rental prices – an increase, albeit a small one.

What's the biggest thing that could bring down real estate prices?

Experts say the best remedy for rising housing costs for both buyers and renters is to increase the supply of available properties in the country. That means more construction activity, which in many cities and regions is complicated by regulations that make it difficult to build new homes and apartment buildings.

As of 2022, the US had one Shortage of 4.5 million homes relative to demand for sales, up from 4.3 million last year, according to Zillow data.

“It is critical that we advance policies that encourage and enable more construction,” Olsen said. “A comprehensive approach is needed that includes simplifying processes, reducing initial costs and making it easier to build more and different types of homes.”

deportation Millions of immigrantsas the Trump campaign is proposing could actually worsen the housing shortage, said Roller of the National Housing Law Project. That's because about one in three workers in the construction industry are immigrants, so deporting millions of them could create major headwinds for construction companies.

During the vice presidential debate, Vance also referenced the Trump campaign's proposal to build new homes on some federal lands – an idea the Biden administration also supports. But Roller said such a plan raises serious questions, particularly about the geography of those areas and exactly how development will proceed.

“When you think about using federal land for housing, of course it comes down to the details, and we don't have any details at all,” Roller told CBS MoneyWatch. It could be that “a parking lot in Los Angeles is being redeveloped instead of allowing people to develop in Yellowstone National Park.”