Home sales are bouncing along the bottom, home prices still haven't hit bottom, and government proposals to juice the housing market are simply falling flat.
The one bright spot in the hardest hit markets is foreign investment. While international buyers made up just 3 percent of home purchases nationally in September, according to the National Association of Realtors, they made up a far higher share in Miami and Phoenix, where the now-burst housing bubble left the greatest rubble.
Investors are buying up the distressed inventory at a fast clip, but not fast enough.
So why not try to get more?
That's precisely what a bipartisan team of Senators, Chuck Schumer (D-NY) and Mike Lee (R-UT) are proposing. The last section of a their new immigration bill is titled, "Increasing Home Ownership by Priority Visitors." It would offer non-immigrant visas to foreigners who buy at least $500,000 worth of residential US real estate. Unfortunately, there are a whole lot of caveats that will limit the scope of that potential buying population.
First and foremost, this is not a work visa, and the buyer has to live in the residence for at least six months (not necessarily consecutive) out of the year. That means said buyer would not be able to work in the US for half the year; translation, said buyer would have to be really rich. The buyer would of course have to go through the standard criminal background checks that any US residence visa requires, but they can bring the spouse and kids. The homeowner could not receive any US government benefits, and once they sell the house, they have to leave the country.
Good news, it doesn't cost the US anything.
Okay, so let's be realistic here. 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 said, there's absolutely nothing wrong with spurring foreign investment in the US, but I'm wondering why this bill forces them to live here? We already have solid foreign investors helping to soak up some of our most distressed properties (thousands of Miami condos for sure), and most of these investors hire reputable US management companies to deal with upkeep and renting.
"We would prefer that people of means live here and buy our groceries, our gas and invest in local economies," says Lee's spokesman, Brian Phillips.
Okay, good for us, but lets face it, a rich foreign buyer would rather see a return on investment than get a six-month vacation home. They likely already have that. Foreign buyers have every incentive to maintain the properties because they will want to see maximum rental income, and with rents and rental demand on fire right now, that incentive is even stronger. And how exactly are you going to police these buyers, i.e. make sure they're actually living in these homes for six months?
Perhaps the residency requirement is more political, that is to fend of criticism that we are selling the American dream to greedy foreign investors with no domestic return on that investment. If that's the case, well, forgive me but that's a load of ... We live in a global society with global investors, especially in real estate. US commercial real estate has long benefited from foreign investment, and there's no reason residential shouldn't as well. Rental inventory is too low to meet today's demand, home ownership is no longer a priority or even a possibility for a growing number of Americans, and investors, any and all investors, are sorely needed to eat up foreclosures, rent them out and save us from this continuing despair spiral.