Warmth of the welcome: Immigration and local housing price dynamics

We examine the impact of immigration on local housing price dynamics in the United States. Leveraging a newly developed instrument for US county‐level non‐European immigration, we find that immigration affects both county‐level housing price appreciation and within‐county spatial dispersion in housing price changes. Our estimates suggest that, on average, an immigration inflow equal to 1% of a county's initial population raises housing price appreciation by approximately 6.8 percentage points and lowers within‐county dispersion by about 1.5 percentage points. Importantly, these effects vary across counties and appear to be shaped by local attitudes toward immigrants. Using several county‐level proxies for such attitudes, we find that immigration increases housing price appreciation and reduces within‐county dispersion only in counties where residents are more educated, younger, and less racially biased. Overall, our findings highlight that the impact of immigration on housing price dynamics is highly dependent on the local social and demographic context, particularly natives' attitudes toward immigrants.