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
I think we should encourage citizens to own property in the United States. Our real estate is cheap because of our devalued currency right now. We could attract a great deal of foreign ownership because of it.
I am not sure how I feel about the bill (first time I am hearing about it) but if the person is wealthy enough to move forward with this then they will spend 6 months here SPENDING MONEY.
Also what will happen with income taxes – would 6 months be long enough for the IRS to start to argue that they income tax on their world wide income?
I think there are lots of wealthy individuals who want to live in the US, but due to the complex tax system and being taxed on world wide income they are not interested in moving base to US. There are some counties in Asia, where you can live and work and not really pay and serious Tax. So Why US?
This is a non migrating visa class, so in theory they can live in the US forever without being citizens, If someone has 500K in cash lying around that they must have done some work in life to get the money. i say let them come in, and invest in homes and create a business, they pay taxes on their US income, which is fair, what ever they have in their home country let it be.
Hunter @ Financially Consumed says
I believe you have always been able to buy a green card. If you have the money and don’t want to wait half a decade, why not buy it? Real estate complicates the decision a little, but you have to live somewhere. I think it’s common for other countries to offer concessions on immigration and property ownership for foreighn investors.
I heard this too. It’s kind of funny. I noticed that countries so this when their economy is bad. It is a way to boost the housing market some what… Not sure if it will help. I like the minimum investment amount for the foreigners…
Shailesh Kumar says
You can’t work but can you create and own businesses while in US on this visa? I mean, instead of getting a W2 income, they can be paid as “repayment of debt and interest on debt” on the capital they invested in the business or alternatively they can sell some of their shares every year back to the company they own for capital gains income.
I don’t see the point in not allowing them to work.
Dollar Mill says
I find it a good measure to allow foreign investments in USA. If this will have an impact on the imploded house market business will have to pass a time test. Though, in the past people could always buy a green card if they invested 1 million dollars, now, the ceiling has just adjusted. Will this mean you won’t find houses because all the foreigners run to USA? Not, certainly not.
I think if we see this like first of all why someone invest there –> for gains ? doesn’t look like it can be for near future . For those who are not very wealthy but enough to invest $500k , yes they may be , but for stay there and wait for economy to be growing –> can be but if they can’t work there, it’s not easy for them –> nobody invest. So it should be like you invest in any no of houses but for minimum $500k and also can work there stay there until get green card or kept investment, yes a lot of can and can be a big number. To get going, this scheme must be fair for both country and investor then only get benefited.
I think with a little bit of modification this can do wonders.
How about increase the cap from 250K, to 500K, or even 750K.
Lot of people are migrating into us on eb5 investor visa throughout regional centers for 500K, what this does is give regional centers access to free money ( they giving return like 2% per Annum), in any case, i think what if they modified this a bit
1.) make it so that this is non migrating visa, so they can never become citizens of the US
2.) make it so that they can invest an x amount this can be in a business or/and a house. They would be allowed to work in their own business only. so this is a source of income for the investor. Also they pay taxes etc. on income generated in the US, so this is revenue for the government.
If they even employ 2 people in the business, that is 2 less people to worry about. so this would help.
This Visa can address 2 issues, Housing and businesses, IF money is coming from offshore, and if this money is being used for Business and homes, i see this as a win win situation.
Yes, this may increase competition, but competition is healthy for business.
I was actually considering this visa until i realised i couldnt work there. Makes no sense!
Most of people made commends from US citizen side. I will make it foreigner side. Lets say I have 600K and I like a house in NYC I am trader and I like the idea to have house near Wall Street but I am not single I have a life in another country I have child I have wife they have life they have to go school they need to see parents ect.
So Why I should buy a house and bring my money to help USA economy and “house selling statistics” just for 6 monthes visa? I am rich if I will ask even they will give normal way for 6 monthes visa. and why I have to stay at least 6 monthes ?? What is the mantality behind it?
If I will spend such a money I will ask freedom to enter and quit from country whenver I want. Okay for no work okay for price even it can be more but no-one rich person will allow anybody to limited their freedom especially with their money…
what if I win the lotto as a foreigner and I want to purchase a home but not want to work would I be allowed to live in the us.