How Skilled Immigration Moves Home Prices
Random variation from the H-1B visa lottery shows skilled immigrant inflows push up local home prices, but not rents.
Does immigration raise housing prices? The question is politically charged and empirically hard, because immigrants choose where to move, and they tend to choose booming places. This study cuts through that problem with an unusual source of randomness: the H-1B visa lottery.
Because the lottery makes part of the inflow of highly skilled workers to an area effectively random, it lets the authors separate cause from correlation. The finding: greater exogenous inflows of highly skilled immigrants are followed by higher local housing price appreciation.
The effect is strongest where housing markets are tightest, in areas with faster overall population growth and inelastic land supply, exactly where new demand collides with limited room to build.
One more result stands out: the inflow of skilled workers shows no significant association with local rents. The effect appears to run through the market for owned homes, a useful distinction for investors and for policymakers weighing skilled-immigration policy.
The Takeaway
Using H-1B lottery randomness, skilled immigrant inflows raise local home price appreciation, most where land is scarce, while leaving rents largely unchanged.