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March 18, 2009

Why not?

A better idea is to offer permanent residence status to the many foreigners who are clamoring to get into the U.S. -- if they buy houses of minimal values (not shacks). They wouldn't need to live in those houses, but in order to remove the unit from the total housing market, they couldn't rent them. Their temporary resident status granted upon purchase would become permanent after, perhaps, five years, if they still owned the houses and maintained clean records. The mere announcement of this program might well stop the ongoing collapse in house prices, especially in cities such as Las Vegas, Miami, Phoenix and San Francisco, where prices are down 40% -- but where many foreigners like to live. ... The blueprint for a program to sell surplus housing to immigrants is already in place with the EB-5 visa program. Each year, 10,000 EB-5 visas for this country are available for foreigners who each invest $1 million in a new enterprise ($500,000 in economically depressed areas) that creates at least 10 full-time jobs. After two years, the entrepreneur and his family can become permanent residents.

If people knew about the EB-5 program, the average man probably wouldn't like it. This is a good idea though. We need to dramatically increase our immigration to afford our social security and medicare costs without prohibitive taxes or benefits cuts. It is unambiguously the right thing to do to let these home buyers in. To let people who obviously won't be a drain on our government and want to be here in, we'll expand American labor productivity and capital.

I don't think you should have to have $138,000 to buy your way into the US. Just a job, a lease, and some basic English and civics skills should be required for employment here. But I'd certainly take the housing/immigration plan discussed above as a big improvement. By sucking mildly affluent foreigners looking to immigrate off of the various visa lists the wait time for the needy and desperate will hopefully be shorter. The affluent immigrants will also benefit.

One detail to worry about is how the kin-immigration will work. If you buy a house and you want to bring over your 16 member extended family, will you be permitted to do that? Or is it one house per nuclear family? Or per adult? To strict and you won't get much participation. Too loose and it could end up costing tax payers money.

Another point the article makes is that can't rent the unit out. I don't see that as a problem. The rule should be that they cannot leave the house empty. Unoccupied housing can create terrible problems in communities. See for example All Boarded Up, a story about how Cleveland has wrestled with this problem. By forcing more units into the rental market we could improve many cities, as well as hold down rental prices. Yes, holding down rental prices would somewhat diminish the value of owning a home, but the possibility of a large number of unoccupied houses in marginal neighborhoods is worse. That said, if we encourage them to settle here we get the greatest benefit. the capital infusion, the occupied unit, and their labor force participation.

Would you set the price floor at the national average or based on regional averages? The former does more to prop up the high end of the market, while the latter does more to support the hardest hit areas. They could do a weighted requirement, at least 75% of the region's median home price or $75,000, which ever is more.

Posted by OneEyedMan at March 18, 2009 8:55 AM

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