Senate proposal to reward immigrants who would buy $500k in housing

The down housing market is leading to some interesting ideas including one from two Senators which involves rewarding immigrants who are willing to buy expensive homes:

The reeling housing market has come to this: To shore it up, two Senators are preparing to introduce a bipartisan bill Thursday that would give residence visas to foreigners who spend at least $500,000 to buy houses in the U.S.

The provision is part of a larger package of immigration measures, co-authored by Sens. Charles Schumer (D., N.Y.) and Mike Lee (R., Utah), designed to spur more foreign investment in the U.S.

Foreigners have accounted for a growing share of home purchases in South Florida, Southern California, Arizona and other hard-hit markets. Chinese and Canadian buyers, among others, are taking advantage not only of big declines in U.S. home prices and reduced competition from Americans but also of favorable foreign exchange rates.

To fuel this demand, the proposed measure would offer visas to any foreigner making a cash investment of at least $500,000 on residential real-estate—a single-family house, condo or townhouse. Applicants can spend the entire amount on one house or spend as little as $250,000 on a residence and invest the rest in other residential real estate, which can be rented out…

International buyers accounted for around $82 billion in U.S. residential real-estate sales for the year ending in March, up from $66 billion during the previous year period, according to data from the National Association of Realtors. Foreign buyers accounted for at least 5.5% of all home sales in Miami and 4.3% of Phoenix home sales during the month of July, according to MDA DataQuick.

This seems like it would be part of a discernible shift in the immigration conversation: primarily letting rich or educated immigrants into the United States.

The real question: does this really help the housing market? What kind of impact are we talking about – a 1% boost, 10% boost? As the article suggests, wealthy foreigners are already buying property in other countries. I’ve highlighted a couple of stories where wealthy Chinese buyers have purchased homes in New Zealand and Vancouver, Canada. When this happens, locals have mixed reactions. Would this proposed policy simply promote more foreign investment or would it push people to actually move to the United States and work here?

Would this bill also only help more wealthy areas, such as big cities or coastal/vacation regions? Would this primarily benefit people with bigger, more expensive homes?

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