The 1990 Immigration Act: A Structural Shift
For most of the 20th century immigration operated within capacity constraints, averaging under 200,000 a year from 1925 to 1965. The Immigration Act of 1990 raised the annual cap from roughly 530,000 to 675,000, created the H-1B program, and expanded family reunification.[1][4] Admissions passed one million a year and have stayed there since.
Average Annual Legal Immigration by Period
Source: Migration Policy Institute[1], Department of Homeland Security[5]
The Supply-Demand Imbalance
When demand grows faster than supply, prices rise. The two worst decades on that measure since 1950 are the 1990s and the 2010s, the two that follow the 1990 Act.[3] The 2000s, which included the building bubble, ran close to the 1950s rate.
| Decade | Population Growth | Housing Starts | People per Start | Context |
|---|---|---|---|---|
| 1950s | 28.6M | 15.1M | 1.90 | Post-war baby boom + building boom |
| 1960s | 24.1M | 14.9M | 1.62 | Continued expansion |
| 1970s | 23.2M | 17.7M | 1.31 | Peak construction decade |
| 1980s | 22.2M | 14.7M | 1.51 | Savings & loan era |
| 1990s | 32.7M | 14.5M | 2.26 | Immigration Act impact begins |
| 2000s | 27.3M | 15.1M | 1.81 | Includes housing bubble + crash |
| 2010s | 22.7M | 9.8M | 2.32 | Lowest growth, worst ratio: starts collapsed |
Sources: U.S. Census Bureau[3], Census Bureau Housing Starts[6]
Key Finding
Two different failures produced the same shortage. The 1990s added 32.7 million people, the largest decade increase on record, against 14.5 million housing starts. The 2010s added 22.7 million, close to the 1980s figure of 22.2 million, yet the ratio rose from 1.51 to 2.32 because housing starts fell from 14.7 million to 9.8 million.
Demand outran supply in the 1990s. Supply collapsed in the 2010s. Either one opens the gap, which is why the Act pairs a demand measure (Policy 2) with a supply measure (Policy 5) rather than relying on either alone.
Not Just Total Numbers: Where Immigrants Settle
National totals understate local pressure. The six metros receiving the most immigrants - New York, Los Angeles, Miami, Houston, Chicago, and the Bay Area - are also among the least affordable markets in the country, where inflows meet supply that cannot expand to meet them.
New York Metro Area
Receives more immigrants than any other U.S. metro - approximately 200,000 per year.[7] Median home price: $680,000. The metro added 1.2 million people from 2010-2020 but permitted fewer than 400,000 new housing units.[6]
Los Angeles Metro Area
Second-highest immigrant destination. Median home price: $950,000. Between 2010 and 2020, the metro area issued permits for approximately 250,000 new housing units against population growth of over 500,000.[6]
The Price-to-Income Ratio: A Generation Locked Out
The median home cost about 3.6 times median household income in 1985 and 4.1 times in 1990. Today it costs roughly 5.3 times.[9] The ratio held below 4.2x from the 1960s through the mid-1990s, began climbing in the first decade of sustained million-plus admissions, and has not returned since.
Median Home Price-to-Income Ratio
Source: Federal Reserve Economic Data, National Association of Realtors[9]
The 1924-1965 Precedent: What Happened When Immigration Paused
From 1924 to 1965 annual immigration averaged under 200,000.[1] Homeownership rose 16.3 points and real family income doubled. Other forces contributed, and the full analysis of that period weighs them.
| Metric | Before Pause | After Pause | Change |
|---|---|---|---|
| Homeownership Rate | 45.6% (1920) | 61.9% (1960) | +16.3 pts |
| Real Median Income | $3,300 (1929) | $6,900 (1965) | +109% |
| Income Inequality (Gini) | 0.49 (1929) | 0.39 (1968) | -20% |
| Middle-Class Share (est.) | ~30% (1920s) | ~60% (1960s) | Doubled |
Sources: U.S. Census Bureau[3], Bureau of Economic Analysis[10]
The Post-War Building Boom
With immigration low and demand manageable, the United States built housing at an unprecedented rate after World War II. Levittown, completed in 1951, delivered 17,447 homes in just four years.[11] The combination of federal support (VA loans, FHA insurance), streamlined processes, and a labor market underpinned by tight immigration policy enabled homeownership to reach levels never before seen in American history.
Wage Effects: Competition in the Labor Market
Housing affordability is a function of both prices and wages. High immigration levels affect both sides of this equation: they increase housing demand (raising prices) and increase labor supply (suppressing wages).
Borjas finds that a 10% increase in labor supply from immigration reduces wages for competing workers by 3-4%, with the largest effect on workers without college degrees.[12] CBO estimated in 2024 that the recent surge would modestly reduce average hourly compensation over the following decade, concentrated in construction, food service, and agriculture.[13]
Double Impact
High immigration simultaneously raises housing costs (through increased demand) and suppresses wages (through increased labor supply). The combined effect is a deterioration in housing affordability that is greater than either factor alone. A worker whose wages are suppressed by 3-4% while home prices rise 20-30% faces a compounding affordability crisis.
What Other Countries Have Done
Several countries with housing affordability challenges similar to the United States have adjusted immigration policies as part of their response:
Canada
After record immigration drove housing prices to crisis levels, Canada reduced its immigration targets by 21% for 2025 and signaled further reductions.[14] Prime Minister Trudeau explicitly linked immigration levels to housing capacity.
Australia
Reduced its permanent migration cap from 190,000 to 185,000 in 2023 and tightened temporary visa programs after housing affordability became a leading political issue.[14] Both major parties acknowledged the connection between immigration levels and housing supply.
New Zealand
Tightened immigration requirements and reduced visa approvals by 30% between 2023 and 2025 as part of a broader housing affordability strategy that also included construction incentives.[14]
The Arithmetic Is Simple
The country builds about 1.4 million units a year. Annual immigration adds over a million people needing an estimated 400,000 to 500,000 units,[15] roughly a third of all new construction. Against a 3.8 million unit shortage and construction rates flat for decades, building alone cannot close the gap.
Policy Response
The Affordability and Immigration Act proposes a 90% reduction in all immigration categories for 10 years:
- •Temporary Pause: 90% reduction across all immigration categories for a defined 10-year period
- •Purpose: Allow housing supply to catch up with existing population - closing the 3.8 million unit shortage
- •Historical Precedent: A similar pause from 1924 to 1965 correlated with the greatest expansion of the American middle class in history
- •Reassessment: After 10 years, immigration levels would be reassessed based on housing availability, wage data, and infrastructure capacity
This is not a permanent change. It is a capacity-based recalibration - a pause to allow the country to build the housing, infrastructure, and economic conditions necessary to support population growth without pricing out the families already here.