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By Robert Thorpe
Senior Editor
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A recent report from J.P. Morgan highlights various factors influencing the U.S. housing market. The influx of undocumented immigrants, alongside supply constraints and interest rate pressures, may be contributing to the ongoing housing shortage in 2025.
Newsweek reached out to J.P Morgan via email for comment.
Why It Matters
The U.S. housing market faces a critical supply shortage, with the National Association of Home Builders (NAHB) estimating a deficit of around 1.5 million homes. The NAHB attributes this shortage to "persistent supply-side constraints, including costly and inefficient tax, land, and construction policies."
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But a new report from J.P. Morgan suggests undocumented immigrants could be "ramping up housing demand" and contributing to the supply shortage, echoing concerns previously raised by President Donald Trump and his administration.
What To Know
J.P. Morgan's study, released on February 10, offers insights into the complex dynamics of the U.S. housing market for 2025. The report highlights key factors contributing to the housing shortage, including supply tightness and underbuilding.
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Michael Rehaut, head of U.S. homebuilding and building products research at J.P. Morgan, mentioned that existing homes for sale have returned to normal levels in key metropolitan areas. However, overall supply remains tight compared to historical averages.
"Supply should be less of a support for the housing market in 2025," he said.
The study suggests that undocumented immigrants may be a contributing factor to the housing shortage. It estimates that there are approximately 11.2 million undocumented immigrants in the U.S., and acknowledges this number could be even higher. As a result, housing demand might be more significant than reported figures suggest, leading to a shortage of available homes.
Trump and his administration have often cited undocumented workers as a primary cause of the housing shortage. During his 2024 presidential campaign, Trump pledged to address the housing crisis by deporting millions of undocumented immigrants, claiming they drive up housing costs. His administration also planned to ban mortgages for undocumented immigrants, arguing this contributes to higher prices.
However, this approach could have unintended consequences, as around 30 percent of construction workers are immigrants, according to the report. Reducing this labor supply might worsen the affordable housing crisis by slowing construction.
"Cutting immigration would mean cutting labor supply in the construction industry, which could end up exacerbating the lack of affordable housing," John Sim, head of securitized products research at J.P. Morgan, said.
What People Are Saying
Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "The impact of undocumented immigrants on the housing market is difficult to fully understand, as data pertaining to it remain spotty, at best. From what research has been published, we can gather most of these individuals are renters by a large margin, which can put pressure on the demands of building new rental complexes.
Similarly, many of these renters do eventually want to transition into homes. While the undocumented population more than likely isn't swaying numbers across the entire United States, in certain more in-demand markets they absolutely could be adding to housing shortages."
"Location and labor are the two biggest culprits in our current housing supply crisis, far more than immigration. The pandemic sparked a mass relocation to many states and cities that simply weren't prepared for an influx of new residents who would be eager to purchase property.
These same states weren't ready from a labor perspective either, as it's been increasingly difficult to find employees to assist in the rising demand of new home builds. This is going to be an ongoing issue, as if prices and interest rates do start to fall, we'll see more buyers enter an already undersupplied market."
Kevin Thompson, founder and CEO of 9i Capital Group, told Newsweek: "Possible? Yes. The main cause? Absolutely not. The housing shortage is multifaceted, but I place more blame on large institutional buyers—despite claims that they make up less than 2 percent—and individual investors purchasing homes for rental income.
Many of these properties are held in trusts, business entities, or personal names. The surge of cheap capital since the Great Financial Crisis allowed for widespread property acquisition, contributing to the current market constraints."
"While immigration and a lack of new construction are often cited, the bigger issue stems from cheap capital and low interest rates. This mirrors the Great Financial Crisis in many ways. The housing market is seen as part of the American Dream—offering sustainable cash flow opportunities—which has incentivized institutions, corporations, and individuals to buy properties across the country."
What Happens Next
Policymakers will need to balance immigration reform with housing policy. While J.P. Morgan's report highlights migration as a factor in the housing shortage, solutions will require addressing broader issues such as zoning reforms and construction incentives.
Beene supports careful housing deregulation to ensure safety and efficiency, advocating for removing red tape while avoiding cutting corners. He also suggests subsidizing education programs for construction workers to reduce start-up costs and attract more workers.
Thompson proposes making it harder for institutions to buy residential properties by reducing investor advantages and increasing borrowing costs for business-owned properties. He recommends modifying the tax code to remove benefits for institutional investors and supports taxes like the "Empty Home" Tax to discourage vacant properties held for speculation.
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