We need to do what we can to stimulate housing and the economy. Right?
That seems to be the overriding sentiment aimed at the new proposed bill authored by Senators Charles Schumer (D., N.Y.) and Mike Lee (R., Utah) , the section titled, “Increasing Home Ownership by Priority Visitors,” who want to give foreigners a visa if they purchase $500,000 or more in American homes.
It can’t be just any real estate, either. They can’t buy land, warehouses, or office buildings. We’re talking about residential real estate like town houses, homes, or condos. They’re free to use them as investment property but the minimum purchase is $250,000 per property. If they want to purchase 10, $50,000 homes they can do that but they won’t qualify for the visa.
As long as they meet the $250,000 minimum and purchase at least two at that price, they can buy whatever they want after that and still qualify for a visa.
People like the late Steve Jobs and many others have been harshly critical of the way the United States has effectively stifled its manufacturing base by not issuing more work visas to foreign engineers and other skilled workers. Yet, knowing that, the two authors of the bill included as part of the bill a stipulation that the visa doesn’t allow the new home owner to work in the United States. That stipulation makes any purchased property in to a vacation home or investment property rather than a means for the owners to be long term residents.
The Problems with this Proposed Visa for Homes Bill
First, according to CNBC, there is a little talked about stipulation in the bill that states that the buyer of the property has to live in the residence for at least six months out of the year. That doesn’t mean that it has to be consecutive months. How this works with the idea that an investor could purchase multiple properties to total $500,000 is unclear.
It also presents another problem. The only people who are going to spend half of a year living in a country where they aren’t allowed to work are those who are already of high net worth and if they’re high net worth and like to travel (seems obvious that they do) why would they want to sit in America with essentially nothing to do but see the sights for half of a year every year that they own the property?
Next, the more public problem with the bill, according to the Wall Street Journal, is that any incentives to buy property should go to those who are already United States citizens. As CNBC Real Estate correspondent Diana Olick says, “I like the idea of giving incentives to real estate investors but I’d rather see those incentives go to U.S. citizens, like having Fannie and Freddie open the credit gates to them.” That objection is unfounded, say the bill’s proponents since this bill wouldn’t cost the taxpayer anything.
What if this does Work to Sell Homes?
We’re talking about people who will be buying houses that don’t have work visas. I’m wondering what kind of community this builds in a neighborhood? What are the long-term effects of this incentive? Sure a family could be moving into that home that won’t sell next door but for how long? It may easily turn into a rental property where the owner is absent, living in another country. Does that help a neighborhood’s housing value long-term?
Perhaps we would be better served to help those who would come into our country with real marketable skills? This way we have more long-term effects on the economy. People coming on a work visa would be producing for the economy.
Still, the bottom line on this may be, who cares? The amount of interest that this bill would create would likely be so small that it would do nothing to address the oversupply of homes on the market. The amount of foreign investment would have to be massive and with the amount of foreign money already pouring in to the U.S. Real Estate market, a large scale uptick based on a free visa that allows foreigners to live in America and purchase a small amount of goods will do very little.
Still, taking even one home off of the market is good for individual communities and although it won’t make a big national difference, it would make a difference to others in the community who are trying to sell their home.
This bill may continue to receive an apathetic, “who cares” from both sides but we’ll give Senators Schumer and Lee credit for trying. Right?
But are they really trying hard enough? Is this really the incentive we need? Are there better ways to stimulate housing sales in the country?
Does this incentive really make sense?
Maybe a better proposal would have a lower housing dollar limit and would encourage foreigners with professional degrees to plant roots in the U.S. with work visas?
What do you think of this proposed bill? Does it make sense as a way to increase housing demand? Or are there better ways to help stimulate housing?
Share your thoughts in the comments!
- Bill Would Give U.S. Visas to Foreign Home Buyers – WSJ.com http://online.wsj.com/article/SB10001424052970203752604576641421449460968.html
- Buy a house, get a visa? – Yahoo! News http://news.yahoo.com/buy-house-visa-135500183.html
- Buy a US Home, Get a Visa— But There’s a Catch – CNBC http://www.cnbc.com/id/44976426/Buy_a_US_Home_Get_a_Visa_But_There_s_a_Catch