My solution to the national housing crisis
Offer an immediate green card to any foreigner that buys a house here (along with their family of course, and subject to a few other filters like no criminal record and a minimum price on the house). The green card is only good as long as they continue home ownership - no new foreclosures allowed. The instant surge in demand would prop up prices and stop the cycle of foreclosures and neighborhood decline (and failing banks). If we want more specific geographic targeting where housing is the weakest, states could opt in or out of the program, or even define narrower areas inside their borders.Update 2/11/09: Thomas Friedman of the NY Times backs the same idea, as does the economics blog Marginal Revolution.
Update 3/17/09: More support from a Wall Street Journal op-ed.
Update 4/22/09: Columnist Scott Burns backs the same idea from economist A. Gary Shillng and real estate developer Richard Lefrak.
Labels: economic strategy
posted by Tory Gattis @ 7:42 AM
14 Comments:
I think we should just close the flood gates to all the foreigners comming to america. There are too many already living here in Houston.
Pretty soon we will be foreigners living in our own country.
Immigration as a proportion of the population is far smaller today than the waves that came at the turn of the last century (a la Ellis Island), and our nation survived - and thrived - just fine. (see 1820-2010 graph here, but then compare to 76m pop then vs. 300m pop now:
http://www.cairco.org/data/data_us.html vs.
http://www.census.gov/popest/archives/1990s/popclockest.txt )
In addition, these immigrants, since they will have to qualify to buy a house, will obviously have wealth, income, and skills that will add to our economy.
Tory,
I suspect that the housing crisis is already over. By the time indexes like the Case-Schiller release June numbers they will show that housing prices have bottomed and are generally rising.
Foreclosures this past month increased by a mere 3%. I also suspect that next month will show flat or even decreasing foreclosures.
By the time any new legislation could come up to vote, prices will be rising almost across the board and foreclosures will be decreasing.
The mortgage companies that survived will once again see increasing prospects.
I agree that we need more immigrants, especially highly skilled ones, but not sure that linking this issue to the housing crisis is useful.
What about something like open immigration? We wouldn't likely do this unilaterally, and this will likely never happen - but I think I like the idea. I wouldn't mind the ability to just move to China or Europe one day - all I have to do is go through legal channels so everybody knows where I am - but there would be no restrictions like there are today.
In the short term - raise the quotas for H1-Bs and green cards, and process them more quickly. Immigrants typically buy houses and make a positive impact on the economy anyway.
this might be an interesting approach to repopulating cities like New Orleans and Detroit.
Oh please Mr. Transportation and development guru, dont try and solve the immigration problem too.
Brian, the 3% increase you speak of is the increase over LAST month. The increase year-over-year is still in the 60% range. Last year there were 1.5 million foreclosures. This year is expected to see 2.5 million. I don't think the crisis is over.
As for Tory's plan, we already have rules that allow wealthy foreigners easy immigration to the US. Forcing them into crummy neighborhoods will not increase the flow. It is also helpful to understand that the lion's share of immigrants coming here from Mexico (the only ones that everyone is complaining about) are dirt poor, and unable to buy a home on arrival. Most want to earn enough money to return home. If they had that kind of money, they would not come here in the first place.
anon (directly above),
I like your idea of a small scale experiment. You can end the experiment or expand it depending on the results.
The only thing is how to reward somebody who moves there. Give them a waiver from city income taxes for 5 years? Or better yet, give them a 50% reduction in property taxes for 5 years?
RedScare: I'm not talking about the wealthy. I'm talking about people that can qualify and afford a mortgage on a $150K to $350K house. Many may be small business owners abroad with some money saved up that would like to move here to give their kids a better chance. Others may be professionals - esp. IT workers - that can't get one of the precious H1B visas.
Redscare,
Yes, the 3% was last month. Focusing on year-to-year, levels out volatility and provides better headlines, but if you want to know where things are headed in the near future you have to look at the monthly numbers.
Three months ago (and the 6 months prior) all 21 tracked markets by the Case-Shiller were declining. Two months ago 2 showed an increased. Last month 7 were increasing. The second order change turned positive for 13 of the 14 falling markets.
These reports come out a good 2 or 3 months after the present. Admittedly, I am looking at short-term trends, but I'll be shocked if prices nationwide don't start rising by the end of this summer.
While the number of foreclosures is important, the severity is just as important. When prices are falling severity increases. If foreclosure severities begin to shrink this will offset some of the effects of increased numbers of foreclosures.
Once foreclosures rates and prices level off, which I believe they will within weeks if not already, then the massive right downs that companies like AIG, Citigroup, etc... have had will end.
Foreigners are already buying American real estate. Look at the high-end Manhattan, Miami Beach, and Los Angeles markets. The 150K – 350K properties are priced too high for working class immigrants and are priced too low for wealthy immigrants to think twice about.
What would be better and what may actually get some traction is an automatic green card for any immigrant with a degree in physics, engineering, geo-chemistry or geo-physics. Also extend federal Pell grants and subsidized loans to any foreign student who majors in the above mentioned fields and agrees to pay back the loans while working in the above mentioned fields in the US. Also, get rid of the cap on H-1 and H-2 visas.
I'm actually saying the same thing (get rid of the skilled visa restrictions), I'm just making it politically palatable by requiring them to buy a house.
Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tossed, to me:
I lift my lamp beside the golden door.
Please have a slightly different take on the same subject
http://not-bailout.blogspot.com/
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