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Saturday, March 21st, 2009 at 6:29 PM

Solve Housing With Immigrants

From the WS Journal:

http://online.wsj.com/article/SB123725421857750565.html

An excerpt:

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.

Each year, 85,000 H-1B visas are granted for foreigners with advanced skills and education, and last year, 163,000 petitions were filed in the first five days after applications were accepted. The Ewing Marion Kauffman Foundation estimates that as of Sept. 30, 2006, 500,040 residents of the U.S. and 59,915 individuals living abroad were waiting for employment-based visas. Many would buy homes if their immigration conditions were settled.

These people tend to be highly productive. In 2006, foreign nationals residing in the U.S. were listed as inventors on 25.6% of the patent applications filed in the U.S., up from 7.6% in 1998. A Council of Graduate Schools survey found that in the fall of 2007, 241,095 non-U.S. citizens were enrolled in graduate programs. Some 55% were in engineering and the biological and physical sciences, compared with only 16% of U.S. citizens. In 2007, more people on temporary visas received doctorates in physical sciences and engineering than U.S. citizens.

There is a high correlation between education and incomes, and in today’s uncertain economic climate, many wealthy foreigners desire U.S. resident status just as a number in Hong Kong secured residences in Singapore and Canada before the British handover to China in 1997. They rapidly became over a quarter of Vancouver’s population, and brought in billions of dollars to buy houses and make other investments.

We could benefit from such an influx. Merrill Lynch estimates that in 2007 there were 10.1 million individuals in the world, 7.1 million outside the U.S., with at least $1 million in financial assets that totaled $29 trillion. If new immigrants bought the 2.4 million excess houses at today’s $184,000 median price with funds from abroad, they would bring untold billions. The immigrants would also buy consumer goods, pay taxes, and start many new businesses.

Posted on Saturday, March 21st, 2009 at 6:29 PM in Ideas/Solutions, Thinking of Buying? | 29 Comments » |  Print You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Reader Comments: 29 Responses

1. Ah, the old “wealthy foreigner” argument.

   First it was presented as a reason why housing wouldn’t fall, and now it’s being advanced as a means to stop housing from falling further.

   Wrong on both counts.

   tj and the bear | March 21st, 2009 at 7:05 pm

2. Man, I am getting so sick of all the “solutions” for the problem of excess housing inventory and ever increasing affordability. For f*** sake, just let the g-damn free market adjust housing prices down to something below “f-ing ridiculous”, and you’ll reduce housing inventory, and the market will start again! It’ll be like a fantastic magical stimulus program, except unlike the other stimulus programs recently and the one getting a press tour now (called a “budget”), this one would not only work, but not waste additional Trillions of future taxpayer money! It would be like a g-damn free market capitalistic miracle!

   Nick | March 21st, 2009 at 7:44 pm

3. Whoever proposed this idea needs to be sent to Gitmo and kept there. Even after they close it down.

   Consultant | March 21st, 2009 at 7:47 pm

4. I think it’s a brilliant idea. For some strange reason people still want to live here, or at least have US citizenship. It’s one of the few valuable things we have left – why not monetize it?

   sfbear | March 21st, 2009 at 7:54 pm

5. I take merrill Lynch reports at face value.
   They reported last year (google it)there were an estimated 6.5 million household with a net worth of over 1 million (excluding real estate). Now they are reporting only 3 million in the US. That is a major haircut of net worth, more than half have dropped out of the millionares club,that can not bode well for the high end priced homes.

   There is an estimated 1 million homes in the US valued at 1 million +, so at least in theory there are enough buyers for the 5 year plus inventory.

   econman | March 21st, 2009 at 7:58 pm

6. Sorry Jim but this is just a way of saying more people are a net benefit to the economy. We overbuilt, we didn’t under breed.

   Sure successful immigrant influx is a good thing but do you honestly think someone leading a millionare’s lifestyle elsewhere isn’t already invested in the US somehow.

   Rob Dawg | March 21st, 2009 at 8:12 pm

7. Nick,

   Everyone’s concerned about the damage done by the housing bubble deflating, but like you I’m more concerned about the cost to society over overpriced housing and the incentives for capital misallocation that would be necessary to preserve it. The more money spent on housing the less that’s available for everything else.

   That, and I’d like to have Jim get me a sweet SD ocean view property some day and not sacrifice any body parts in the process.

   tj and the bear | March 21st, 2009 at 8:29 pm

8. Dawg,

   I’m just re-printing this stuff – I’m hoping to scoop CR someday.

   But I agree – every ‘immigrant’ I come across already has investment here, usually family down the street or around the corner. They’ve already figured how to make a living here, and moving is just the final chapter.

   If there are immigrants that have enough money that they’ll move here, and then figure out what to do, then they must be loaded.

   Jim the Realtor | March 21st, 2009 at 8:36 pm

9. Nick,
   Frustrating as it is for everyone, this blog has been one of the few intelligent blogs where people post without vulgarity (even when it feels appropriate).

   Let’s keep it that way.

   Thanks.

   citizen | March 21st, 2009 at 9:03 pm

10. Note that I filtered out my profanity; I felt the tone was appropriate for the message I was trying to convey. It seems like every day we read about a new “solution” to keep housing less affordable or another way the banking industry’s gambling losses are going to be paid for by taxpayers, and I’m getting sick of it. Rather than debating which malevolent plan is the least destructive and punitive to the responsible people of the country, it would be nice (for me, personally, at least) to see a little more outrage about the endless stream of misguided and/or destructive “solutions”, while all the prognosticators persist with ignoring the blatantly obvious real solution to the problem.

    It doesn’t do us, the people, any more good to capitulate to a plan because “it doesn’t seem as bad as the other plans”, any more than it does to eventually accept the government nationalizing industries once their propaganda has sufficiently disseminated the idea that socialism is the “least bad” approach, when compared to all their other horrible approaches. In my opinion, rational people should take a step back and say “wait a second, let’s keep in mind that ALL of your plans are horrible, and all of them ignore the simple, easy, and blindingly obvious solution of just letting housing prices get back to the level where normal people can buy homes without mortgaging their, or their children’s, future.”

    That’s all I’m trying to say.

    Nick | March 21st, 2009 at 9:53 pm

11. Jim,

    Just curious, but what are the bounds of “North San Diego County”?

    tj and the bear | March 21st, 2009 at 9:54 pm

12. Nick,

    I don’t think your comment was abusive, but then I agree. What I find particularly distressing is that while we are justifiably accustomed to food, clothes, electronics, toaster ovens, furniture, cars — absolutely everything that breaks if you hit it — all these things are supposed to get cheaper and better every year. There is no reason why housing shouldn’t be the same. It is tragic the number of boomers who will never really get to know their grandkids in Arizona and North Carolina and all the other places they have exiled their children to by refusing to allow the urbanization of cities and the expansion of suburbs.

    Meanwhile we get thoughts on the tragedy of marginally more affordable housing in the WSJ from the likes of Richard LeFrak, who inherited billions from a father who built at a time when building was deregulated and unprofitable enough that you could actually provide it cheaply for working people: http://en.wikipedia.org/wiki/LeFrak_City,_Queens . This op-ed is like the distilled essence of everything that is wrong with the entire economy — a guy who inherits a fortune made doing something useful and affordable gets together with a guy who regards talking about housing as “investment advice” to put forward a ridiculous gimmick intended to advance the artificial scarcity of a basic human need to fatten their already gorged wallets.

    Timon | March 22nd, 2009 at 12:07 am

13. Whether it would have many takers is questionable, but this a more honest solution than so many others that generate false demand by simply redistributing money from one place to another through government hands.

    Real people, with actual wealth, moving here to buy houses is real demand. And I have great sympathy for immigrants trying to navigate our system–it’s terribly unjust for most would-be residents and citizens. The “buy a house, get a greencard” shortcut is certainly no worse policy than what we already have.

    I don’t know how many people could or would take advantage, but if it were up for a vote, I’d pull the lever in favor.

    lgs | March 22nd, 2009 at 12:29 am

14. Nick,

    Well said, and I agree with the anger.

    Listening to these idiots spout off with their “solutions” is beyond simply annoying at this point. Throwing money at their banker friends is not helping our economy. We need **lower asset prices,** so people can have lower fixed costs, so they can remain out of debt while still keeping the REAL economy going.

    CA renter | March 22nd, 2009 at 12:40 am

15. It’s the Wall Street Journal, what do you expect?

    What I interpret them as saying is, “We’ve destroyed our middle class and made some good cash off it; so let’s import another one that’s still got money.”

    Bob Dobbs | March 22nd, 2009 at 7:24 am

16. Why would anyone want to move here? We’re not exactly friendly to Latinos, and so far as Moslem immigrants are concerned, they’ve been in hiding the last seven years, if not longer. And there’s no jobs nor any prospects for jobs any time soon.

    By “immigrants”, you mean nice white faces from, say, Australia or New Zealand or maybe Canada. Be honest!

    Dave of Maryland | March 22nd, 2009 at 7:44 am

17. Dave, I think they’d mostly be talking Asians. There aren’t enough Canadians or Australians that want to move here. First, they are just not that populous compared to Asia. Second, they have it pretty good where they are. If I lived in any of those three, I would stay put.

    W.C. Varones | March 22nd, 2009 at 8:17 am

18. Let us get this straight. When I immigrated here (20 years ago), I did so believing in integration and becoming the American (granted, that meant something else two decades ago). Besides economic reasons, I immigrated mostly because I believed in the system (free of oppression, build your own destiny, for better or worse). While the last statement might sound like stereotype, one would feel quite different on the other side of the fence (where friendly dictator or the system decides your destiny for you).
    Fast forward two decades, this motivation can now be replaced by writing a small check for junk property. Besides the technicality (we worked and stood in line for 12 years before having a privilege of swearing the allegiance), now anyone with few bucks (regardless of how much he hates us) will be granted the same (minus vote, which he does not care for anyways).

    Is it just me or I just got sold out (again)?
    This is my country, by choice, and not by birth privilege – I had to fight for it. I never signed to be sold out (this cheaply, anyways)!
    Will they auction the flag anytime soon?

    Anonymous | March 22nd, 2009 at 8:20 am

19. I worked with lots of H1-Bs. I call baloney, they’re being used as a cheaper labor pool than existing workers with the same skills.

    No_Such_Reality | March 22nd, 2009 at 8:51 am

20. I like the idea–Mexican, Asian, African, Canadian–bring them all–Immigrants with money will help at add wealth to our system, not drain on it.

    Local Boy | March 22nd, 2009 at 9:05 am

21. It would be common sense to stop the illegals from coming in and/or getting free school + health care and then let in more H1-Bs with PHDs and 100K job offers including health care who actually receive W-2s. Therefore, it will never happen ’cause it is just too logical.

    Anonymous | March 22nd, 2009 at 9:12 am

22. Mmmm…

    Can you smell the sweet scent of xenophobia?

    Anyone here read F.A.Hayek’s brilliant treatise, “The Road to Serfdom”?

    Well, here it is in illustrated form, boys and girls.

    Pay careful attention to slide #12.

    http://mises.org/books/TRTS/

    Jay | March 22nd, 2009 at 12:45 pm

23. Canada did this and they got plenty of takers, millionaires from Hong Kong and other countries leaving and bringing their money and hard work with them.

    Or you could just let illegal immigrants in and pay for their health care and education with everyone else’s taxes. Great choice!

    sdbri | March 22nd, 2009 at 1:11 pm

24. “I worked with lots of H1-Bs. I call baloney, they’re being used as a cheaper labor pool than existing workers with the same skills.”

    That happens no matter where they are. In the long term, we’re probably better off competing against them here, where they may work for 5%-10% less than we do and end up starting a new company here than we would be competing against them in their home countries, where they may work for 80% less than we do and end up starting a new company there.

    GeneK | March 22nd, 2009 at 2:01 pm

25. We have huge levels of both legal and illegal immigration over the last 30 years, but particularly in the last 10-15. And this has not prevented the crisis we are now in.

    More of the same is clearly not the answer, whether for crazy spending, debt or spending.

    If immigration was really a net plus California would not be 40-60 billion in the hole. You have your real life laboratory right here.

    And this does not even mention the quality of life issue, which is material. We don’t need any more exurban wasteland, crowded highways and failing schools.

    daveg | March 22nd, 2009 at 3:46 pm

26. Well said, daveg.

    CA renter | March 22nd, 2009 at 11:32 pm

27. Nick, preach it brotha! Shameful xenophobes!!!

    Stephen Waits | March 23rd, 2009 at 4:40 pm

28. Um, Jay…

    My mother grew up in Austria during WWII, my biological grandfather was Jewish, and my step-grandfather ran the “underground” printing press in Vienna. It was not anti-semitism that drove the support for Hitler. It was the fact that Hitler convinced them he could build Germany up (and Western Europe) after the devastation they saw after WWI. Anti-semitism was more of an afterthought and, by itself, would never have brought Hitler to power. Hitler’s rise was due to economic and social problems of that time.

    The Jewish people in Western Europe (maybe Eastern Europe, but I’m not as familiar with their issues) tended to be among the wealthiest (and many were business owners), and tended to hire only other Jews. The non-Jews became resentful because they had very high unemployment, and they began to perceive the Jews in much the same way many Americans now perceive the “Wall Street” class — that the Jewish people were profiting at their expense. That is the only reason Hitler could convince anyone to work against the Jews.

    CA renter | March 23rd, 2009 at 11:16 pm

29. To All,

    I am one of them…..productive high middle class immigrant (I immigrated 20 yrs ago). Phd in engineering and the rest…as mentioned in the article. I am high middle class not a millionaire (not including house and cars) yet, but close.

    My response to this article: Not investing a dime in housing even though I have cash to do it. Need to see another 30% drop. This is just not me but my other immigrant friends and relatives also share similar opinion. Some are rich, rest all high middle class.

    Besides we own one house so there is no rush to buy another one unless they are more reasonably priced.

    Best investment right now is cash and find a decent yield T-Bond or CD. I even regret putting money in 401k now. Overall there is no investment value left in US. China and Japan will lead the global recovery when we come out of this mess. Canadian Oil and other natural resources will also do well.

    I went thru each sector thoroughly in last few months and besides a small glimmer of hope behind health care I don’t see placing more than 10 to 15% money in US markets.

    Also, if Obama plan does not work lot of us are planning to move out of US. Canada, maybe New Zealand or Fiji Island

    Just my two cents from the “so called wealthy immigrant” perspective.

    CKN | March 25th, 2009 at 12:53 pm