The Housing Burden of Unchecked Immigration

Canada offers a lesson on how decades of importing unlimited cheap labor has inflamed the housing crisis.

Canada’s longstanding consensus on immigration crumbled under the weight of a massive influx of migrants from 2022 to 2024. In that time, Canada took in proportionally more immigrants and experienced double the population growth of any other G7 country. The resulting squeeze on hospitals, schools, labor markets, and above all, housing, finally saw the issue register with the broader public.

But the deeper problem is that Canada’s immigration model—like that of the United States—has embodied the extreme open-society ideal of late twentieth-century liberalism. It masks collapsing fertility and family formation, relies on a revolving underclass of temporary workers and international students to prop up boutique business interests and floundering universities, and pushes housing policy toward dense, transient, rent-driven forms and the unattached single lifestyle. All of this pulls us away from the rooted, stable communities and productive jobs that make family life possible in both the U.S. and Canada.

Canada has the worst housing affordability in the OECD, and one of the highest levels of immigration among Western liberal democracies. Recent surge aside, the proportion of immigrants in the Canadian population (a figure which excludes non-permanent residents and foreign-born citizens) rose in the past 30 years from 15% to 25%. Forecasts project this level will climb further, to between 30% and 40% in the next decade, particularly in the context of low domestic fertility rates.

Critics insist that the link between immigration and housing affordability is all correlation without causation. It is true that Canada’s housing woes are also linked to regulatory glut, low price-to-income ratios, and an economy suffering from low productivity. But a recent TD Economics report makes the connection clear. It shows that population growth dropped from 3.2% to 0.9% when Ottawa moved last year to rein in non-permanent resident targets and to modestly lower permanent resident caps.

What’s more, TD estimates 3.5% rent growth for purpose-built rentals over the next two years, which would have been 5.5% had the previous high-immigration trajectory remained in place. Second- and third-quarter rent statistics confirm those predictions, showing not only slowed growth but active declines in rental prices in Toronto, Vancouver, and Montreal associated with reductions in non-permanent residents. To see why immigration pressures on housing were so pronounced, we have to look at where newcomers tend to settle: overwhelmingly, in the very markets least capable of absorbing additional demand.

Canada’s migration pressures differ from those of the United States, where the challenge is a large illegal immigrant population. Yet the effects on housing are similar. Canada’s overly permissive and welcoming approach incentivized visa overstays on study and work permits as well as asylum claims filed long after entry. Ottawa’s new Border Act acknowledges the problem, consciously introducing a 14-day asylum window and establishing broader powers to cancel applications in alignment with the U.S.

Migrants have concentrated in big cities across both countries, affecting house rental and purchasing affordability. Both pools of migrants are connected to business models that prioritize cheap labor and international students. That’s why targeted reductions—like we’ve already seen in Canada—should have similar beneficial effects on housing affordability in the United States.

Lessons From The North

Canada’s immigration and housing story goes as follows: Immigration is concentrated in urban centers with rigid supply and high demand. In 2021, immigrants made up 23% of Canada’s population, but 42% of the Toronto Census metropolitan area, with another 5% consisting of non-permanent residents. Similar patterns hold in Vancouver and Montreal. From 2016 to 2021, recent immigrants accounted for more than 70% of all population growth in private households—in other words, nearly all net growth in many big-city populations.

Within those cities, different classes of newcomers pushed on different parts of the housing market. Permanent residents increased demand for homes. Non-permanent residents barely show up in the homeownership market, but have very high use of rentals. This is exactly what you would expect from a system built around temporary work permits and study visas: a revolving door of people heavily concentrated in rental housing in our city centers, often at the lower end of the market.

What’s more, temporary foreign workers and international students pay, respectively, about 21% and 10% more in monthly rent per unit than comparable Canadian-born renters in the same urban areas. In practice, universities and low-wage employers have developed a business model that bids up exactly the kind of small, older, crowded units where domestic renters with fewer options also live.

I’ve long argued that housing is an anchor of opportunity, community, and social well-being. The end goal must not be density for its own sake under a “build, build, build” libertarian model, but family-friendly housing: ground-oriented homes, multiple bedrooms, living space for children and family, rooted in walkable, stable neighborhoods. Instead, policy has steered the market toward exactly the opposite: micro-apartments near transit for mobile singles, investor condos, and student units carved out of aging housing stock.

When temporary residents drive population growth and the average new build is a 400-square-foot unit, you are not solving the fertility and family formation crisis. In fact, you are perpetuating a vicious cycle of mutually reinforcing models: cheap labor, tuition subsidies, and lowest-common-denominator housing types. This entrenches a rootless cosmopolitan worldview that sees people as belonging anywhere and therefore nowhere. The path to ever-greater fertility decline is crystallized in the process. A recent University of Toronto study confirms this: sizable fertility decline in the United States since 1990 is linked to the shortage of affordable, family-sized homes.

Reduced immigration wouldn’t just make housing more affordable by easing short-term pressure on rental and ownership demand. Markets respond to policy-driven influences. In Canada, we’re already seeing lower demand for purpose-built rentals as a result of immigration reductions. This will shift developer incentives toward family-friendly stock.

Immigrants and Housing Supply

None of this is to deny that immigrants are also deeply embedded in housing supply, and especially in construction. In Canada, immigrants now account for 23% of all residential general contractors and builders, 40% of architects and civil engineers, and nearly a quarter of construction managers. Permanent and non-permanent resident immigrants alike make up increasingly large shares of tradespeople as well.

The United States offers a cautionary parallel. Immigrants there now make up about 25.5% of the construction workforce, and roughly one in three construction trades workers is foreign-born. The housing affordability issue is also exacerbated to varying degrees by the presence of temporary, undocumented, and permanent immigrants. Recent estimates found a 1% immigration increase leads to a 1.6% rise in rental prices and a 9.6% jump in home prices in nearby metropolitan areas. It’s unsurprising that President Trump’s Housing and Urban Development Secretary, Scott Turner, has made a point of connecting housing affordability to immigration policy. He’s argued that reasserting control over migration is needed to cool demand and “make housing more affordable for American families.” But you cannot slam the door on various types of migration and expect housing construction to accelerate. Changes must be prudently undertaken over time.

But this mutually reinforcing connection is precisely why the current model is so corrosive. It uses ever-higher inflows of migrants to paper over domestic failures: low fertility; neglect of trades training; universities that have become semi-privatized through foreign tuition; and a regulatory system that makes it punishingly difficult to build enough family-friendly housing yet easy to build shoebox apartments. Furthermore, it entrenches expectations that certain jobs, especially in construction and low-wage services, are “for immigrants,” reinforcing the reluctance of domestic Canadians and Americans to enter those fields. Because high levels of immigration tend to suppress wages, this problem is not just cultural, but economic.

As with decoupling from China and its waves of consumer junk, any housing policy shift will require short-term pain. But it’s far preferable to leaving an open wound to fester.

Reigning in the Extreme Open Society

For decades, Canada, the U.S, and much of the West have been wedded to an extreme “open-society” ideal which sees hyper-mobility, autonomy, and diversity as unqualified positives. High immigration has become a kind of moral and economic elixir: it props up GDP, universities, and pension projections, and allows elites to project virtue while avoiding the harder work of improving domestic fertility, reforming higher education, and fixing the regulatory mess strangling our housing supply. It delivers a sugar high until the bill arrives—and the price is rents that crush young families.

A different approach would recognize Canadians’ and Americans’ basic aspirations to marry, raise children, and put down roots in a place they can call home. This requires re-aligning immigration with family-centred housing and labor markets rather than using migrants to compensate for market failures. It means phasing down non-permanent resident and student inflows to a level our housing stock and infrastructure can realistically absorb, while prioritizing permanence and integration over churn. It demands we reorient housing policy away from shoebox apartments and toward family-friendly homes. It necessitates shifting away from our dependence on cheap labor and toward higher wages, better training, and a deliberate effort to draw domestic workers—especially young men—into construction and trades.

Universities addicted to foreign tuition must shrink or reform. Employers must adjust their business models rather than treating low-wage migrants as a permanent subsidy. Governments must face down well-housed NIMBYs in order to overhaul planning, permitting, and building codes. Immigration will and should remain part of Canada’s story, and that of the United States. The question is whether we continue to use it as a Ponzi-style patch for deeper demographic and policy failures, or whether we deliberately scale and shape it to serve a more basic end: making it easier, not harder, for ordinary people to form families, build stable communities, and put down roots in homes that truly are their own.