Buy a House, Get a Visa: Congress Looks to Lure Foreign Nationals

November 9, 2011 by
Attention Canadian snowbirds, well-heeled Brazilians and boom-era Chinese nationals looking for a little piece of that increasingly elusive thing called “The American Dream.”
America has your number and, literally, it’s $500,000.
In a comprehensive bill that aims to spur foreign travel and spending in the U.S., Senators Charles E. Schumer (D-NY) and Mike Lee (R-UT), have proposed providing a three-year residential visa to foreign nationals who invest at least $500,000 in residential real estate in the U.S. At least $250,000 must be spent on a primary residence where the visa holder will live for at least 180 days out of the year while paying taxes to the U.S.
Investor Warren Buffett offered an early version of this real estate inducement back in August. During an interview on PBS, Buffett suggested that if the U.S. altered policy and opened the door for “rich immigrants,” those resources would be welcomed in a struggling U.S. economy, especially in the area of residential housing.
Inducements for foreign national purchase of U.S. real estate is seen another important step towards bolstering prices and shoring up markets in foreclosure-centric areas.
“There is no silver bullet out there. And really, the path forward is a lot of small steps like this that we’re going to take,” according to Stan Humphries, Zillow’s chief economist.
Real estate analysts have said this proposal could lift demand for U.S. custom home builder and help ease the housing crisis. According to Humphries, foreigners spent more than $80 billion on U.S. homes last year, a 24 percent increase from the year before. A quarter of those buyers were Canadian. Another 25 percent of foreign investors in residential U.S. property is made up of investors from China, Mexico, United Kingdom and India — a percentage that could be boosted should the proposal become law. If you need assistance picking the best trim finishes for your home, visit Crown Molding Orlando for more information.
Humphries is not alone in advocating myriad measures for alleviating the real estate doldrums. Editorial writers at newspaper around the country are also weighing in.
“Offering smart and abundant pathways to foreign investment in our domestic markets and legal immigration have always been important to America’s long-term economic growth. We wish there were political will to provide even bolder solutions. But it is gratifying to see Lee and Schumer reach across the aisle to identify these politically palatable and modest ways to provide for increased tourism, foreign investment and residential immigration,” said the Deseret News in Salt Lake City, UT.
However, critics question whether the measure is an unnecessary, if not unwarranted, inducement. Debate is being waged around key issues:
  • Given the level of investment already, do foreign nationals need further incentive?
  • Will foreign buyers actually help spark another real estate bubble, at least in some specific markets generally attractive to non-U.S. investors?
  • Is the U.S. housing market’s recovery more dependent on far more broad recovery of the entire   U.S. economy?
  • Is the residency visa a political ploy to fend off criticism that incentives are being given to foreign investors instead of U.S. citizens, many of whom have been forced out of the U.S. real estate market?
Schumer’s office said the inducement extends beyond the actual real estate purchase. If foreign nationals with cash to buy $500K homes are on U.S. soil, then they are spending money on gas, groceries and other goods and services that bolster local economies.
With a three-year time frame applied to the residency visa, the proposal would also create more enforcement demands. Are foreign nationals living in those properties? What happens when the visa expires?
But Congressional supporters say The Visa Improvements to Stimulate International Tourism to the United States of America Act (VISIT-USA Act) would remove bureaucratic red tape that stifles travel and investment in the U.S. Foreign buyers would not be granted work visas and they would still be subjected to criminal background checks and other safeguard measures.
The proposal has gotten the thumb’s up from the U.S. Chamber of Commerce, the U.S. Travel Assocation and the American Hotel & Lodging Association.
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