1:39pm

Fri October 21, 2011
Crisis In The Housing Market

A Bid To Bring Foreign Buyers To The Housing Market

Originally published on Fri October 21, 2011 5:10 pm

Existing home sales and home prices declined last month, indicating the market remains in a slump. Now there's a proposal in Congress to try to change that. Sens. Mike Lee, R-Utah, and Charles Schumer, D-N.Y., introduced a bill Thursday that would grant U.S. tourist visas to foreign homebuyers paying with cash.

The hope is that this will encourage more wealthy people abroad to spend their money here. The senators' legislation would expedite tourist visas and grant longer stays to Canadian senior citizens. It would also give those foreign homebuyers a visa to be in the U.S. at least six months out of the year — but only if they buy with cash and not a mortgage.

The proposed legislation is like an invitation addressed to the rest of the world to a very exclusive party. Who's invited?

"If you are a person of means and you can live in the United States for more than six months [out] of the year, and you can write a cash check to a homeowner ... in excess of $500,000, then we certainly welcome that," explains Brian Phillips, Lee's communications director.

The bill requires the buyer to spend at least $250,000 on one home he would live in, while the rest of the $500,000 could be spent on separate properties to rent.

"There are people out there who can't sell their homes [and] there are folks here in the United States who can't purchase a home at that rate," Phillips says. "So we want to try to link up people who would like to sell their homes, who are trying to sell their homes, with folks who can afford it."

Broad Base Of Support

In other words, this invitation is open only to those willing to pay the high price of admission. People who can afford to buy homes with cash also presumably would buy furniture, carpets and other goods while in the U.S.

Phillips notes that under this bill, these homeowners would get tourist visas, not work visas. And there's no possibility of foreclosure because they'd buy the properties outright.

The concept appears to have broad support. Billionaire Warren Buffett endorsed it as an effective way of getting rid of excess housing inventory in an August interview with Charlie Rose.

"If you wanted to change [the] immigration policy so that you let 500,000 families in, but they'd have to have significant net worth and everything, you'd solve things very quickly," Buffett said.

Glenn Kelman, chief executive officer of Redfin, an online brokerage with operations all around the country, also supports the plan. "When property values sag and this is a desirable place to live, one of the simplest solutions is just to let more people in so they can buy the homes," he says.

Attractive To Foreign Buyers

Kelman lives in Seattle. He says that just 140 miles north of him, Vancouver, British Columbia, is almost like his hometown's mirror image. The difference is that buyers from India and China are fueling a housing boom there. Meanwhile, building is at a standstill in Seattle.

"You just drive across that bridge into Vancouver and you feel like you've entered the twilight zone. ... The place is just hopping; it's like 2006 all over again and it's never stopped," he says.

Foreign buyers have been snapping up lots of properties in the U.S., too. According to the National Association of Realtors, foreign buyers made up 3 percent of national sales in September. They tend to buy pricier homes — more than 40 percent above the average national sales price.

Walter Molony, a spokesman for the Realtors group, says buyers come from all over the world; their top places of origin are Canada, China, Mexico, the U.K. and India, he says.

Molony says U.S. homes are attractive because they're relatively inexpensive, especially in high foreclosure states like Florida and Arizona. There are also few legal obstacles to transferring titles.

Visas can pose problems for some would-be buyers, Molony says, so it's possible that the house-for-visa trade would make a difference for some. But how many buyers will take the U.S. up on this deal, if it comes to pass, is not knowable, he says.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

MELISSA BLOCK, HOST:

Now to the American housing market. Existing home sales and prices declined last month, evidence that the market remains in a slump. There's a proposal in Congress to try to change that. Among other things, the new bill would grant U.S. tourist visas to foreign home buyers - people paying with cash.

As NPR's Yuki Noguchi reports, the hope is to encourage more wealthy people abroad to spend their money here.

YUKI NOGUCHI, BYLINE: The proposed legislation is like an invitation addressed to the rest of the world, to a very exclusive party. Who's invited? Well, I'll let Brian Phillips do the honors.

BRIAN PHILLIPS: If you are a person of means, and you can live in the United States for more than six months of the year, and you can write a cash check to a homeowner for their home in excess of $500,000, then we would certainly welcome that.

NOGUCHI: Phillips is communication director for Utah Republican Mike Lee. Senator Lee, along with New York Democrat Charles Schumer, introduced legislation yesterday that would expedite tourist visas, and grant longer stays, to Canadian senior citizens. And it would give those foreign home buyers a visa to be in the U.S. at least six months out of the year - but only if they pay with cash, not a mortgage.

PHILLIPS: There are people out there who can't sell their homes. There are folks here in the United States who can't purchase a home at that rate. So we want to try to link up people who would like to sell their homes, who are trying to sell their homes, with folks who can afford it.

NOGUCHI: In other words, this invitation is open only for those willing to pay the high price of admission. People who can afford to buy homes with cash also, presumably, would buy furniture, carpets and other goods while in the U.S.

Phillips notes, under this bill, these homeowners would get tourist visas, not work visas. Also, because they'd buy the properties outright, there's no possibility of foreclosure. The concept is one that appears to have broad support. Billionaire Warren Buffett endorsed it as an effective way of getting rid of excess housing inventory, in an August interview with Charlie Rose.

WARREN BUFFETT: If you want to change your immigration policy so that you'll let 500,000 families in, but they had to have a significant net worth and everything, you'd solve things very quickly.

NOGUCHI: It also gets support from Glenn Kelman, the CEO of Redfin, an online brokerage with operations all around the country.

GLENN KELMAN: When property values sag and this is a desirable place to live, one of the simplest solutions is just to let more people in so that they can buy the homes.

NOGUCHI: Kelman lives in Seattle. He says just 140 miles north from him, Vancouver is like his hometown's mirror image - except buyers from India and China are fueling a housing boom there. Meanwhile, in Seattle, building is at a standstill.

KELMAN: I don't know; you just drive across that bridge into Vancouver, and you feel like you've entered the Twilight Zone. And the place is just hopping. It's like 2006 all over again, and it's never stopped.

NOGUCHI: Of course, foreign buyers have been snapping up lots of properties in the U.S. According to the National Association of Realtors, foreign buyers made up 3 percent of national sales in September. And they tend to buy pricier homes, more than 40 percent above the average national sales price.

Walter Molony is a spokesman for the Realtors' association. He says buyers come from all over the world.

WALTER MOLONY: The top countries of origin for international buyers are Canada, China, Mexico, U.K. and India.

NOGUCHI: Molony says U.S. homes are attractive because they're relatively inexpensive, especially in high-foreclosure states like Florida and Arizona. There are also few legal obstacles to transferring titles. Molony says visas can pose problems for some would-be buyers, so it's possible the house-for-visa trade would make a difference for some. But, he says, how many buyers will take the U.S. up on this deal, if it comes to pass, is not knowable.

Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright National Public Radio.