Illegal immigrants are President Donald Trump’s favorite scapegoat for America’s problems. So, it is no surprise that he blames them for the housing shortage.

More surprising, perhaps, is the recent report from J.P. Morgan that offers a similar explanation.

“It is estimated that there are 11.2 million undocumented immigrants in the U.S., and that number may be higher,” the report states. “This could be ramping up housing demand more than figures suggest, resulting in a shortage of stock.”

This line of thinking is fundamentally flawed. The absurdity should be apparent when considering its logical corollary. If demand for housing causes shortages, then 11 million undocumented immigrants are a drop in the bucket compared to the more than 300 million Americans who are here legally and bidding up home prices. If only we could do something about those selfish citizens who recklessly want to buy or rent homes, housing prices would come down dramatically!

Where shortages already exist, spikes in demand can certainly make them more painful, but demand does not create shortages—at least not sustained ones. Presumably, migrants buy more than housing, but they do not create shortages in other goods because most industries are free to respond to increased demand.

Why can’t housing developers do the same? The answer is that supply constraints create shortages, and in the housing market, those constraints are imposed by local and state regulations.

The U.S. population grew from 38.5 million in 1870 to 76 million in 1900, with immigration accounting for more than 12 million new residents. Cities like New York were becoming considerably denser, but housing remained plentiful.

“A largely unregulated private real estate market drove urban expansion,” writes historian Richard White in his history of Gilded Age America. “The cities provided services property owners could use at their discretion and opened up public spaces at low cost for private developments, while at the same time placing few effective controls on the use of private property.”

The tenement apartments of the time got a bad rap, but perspective is important. Tenements were immensely affordable, yet progressive reformers convinced themselves that greater population density—fueled largely by immigrant “lodgers”—inflated rents.

“The landlord finds it easy to excuse a high rental by pointing out that the families will surely take lodgers and earn enough to pay it,” speculated one reformer in 1911. That same year, the U.S. Immigration Commission, in a special report titled “Immigrants in Cities,” found that the average monthly rent across seven major cities was only $10 (roughly $324 in 2025 dollars).

The housing movement that grew from opposition to tenements led to anti-density regulations. New York State fired the first shot with its Tenement House Act of 1901, which included open-space requirements and height limitations. Other cities followed suit. By World War I, reformers had expanded their movement through zoning laws, which became the primary tool for curbing cities’ population growth.

After the war, anti-density reformers were perplexed that builders had lost interest in producing new homes for the low-income rental market. In his 1938 book, “The Challenge of Housing,” New York’s former tenement-housing commissioner reflected bitterly that “New York and many other states ... set up standards sufficiently high to make it impossible to build houses, particularly multi-family dwellings, which could be rented profitably to the poor.”

Developers today are saddled with even more onerous land-use policies, often accompanied by stringent environmental and labor regulations that further delay or prevent development and compound costs. Zoning codes in much of the country even outright prohibit affordable housing such as apartments and mobile homes.

The simple truth is that we would have a severe housing shortage even if President Trump were to deport every undocumented immigrant tomorrow. But if cities and states deregulated their housing markets so developers could build more freely—as they could when immigration was proportionally much higher—housing would quickly become more abundant regardless of how many people crossed the border.

The longer we scapegoat immigrants for America’s self-imposed housing shortage, the longer it will take us to solve it.