A Welcome Mat for Foreigners Buying U.S. Homes

When you buy a house, you get to live there. Unless you can’t get a visa to stay in the country where your new home is located.

As Americans continue to struggle with unemployment and underwater mortgages, foreign investors have helped fill the housing market’s demand gap. In the year ending in March, international buyers spent around $82 billion on U.S. residential real estate, up from $66 billion during the previous year, according to data from the National Association of Realtors. Foreign buyers have been particularly active in retiree-friendly markets, accounting for at least 5.5 percent of home sales in Miami and 4.3 percent of home sales in Phoenix during the month of July, according to MDA DataQuick.

But because of visa restrictions, many of those foreigners are unable to spend as much time in their new homes as they might like.

A bill proposed by Sens. Charles Schumer, D-N.Y., and Mike Lee, R-Utah, would change that. Under the Visa Improvements to Stimulate International Tourism to the United States of America (VISIT-USA) Act, foreign nationals who spent $500,000 or more on U.S. residential real estate would qualify for three-year residential visas, which could be renewed if the buyer remained in the same home, or one of equal or greater value. To qualify, new homebuyers would have to pay cash rather than take a mortgage, spend at least $250,000 of the $500,000 on a single residence, and live in the residence for at least half the year.

The incentive would be similar to existing programs that grant visas in exchange for business investments.

At a time when the housing market continues to lag, the visa program makes excellent economic sense. We need an injection of capital. Foreign buyers see attractive opportunities. We ought to make it as easy as possible for them to bring their money, and themselves, here.

The main objection that has been raised is that foreign buyers don’t need any further incentives to invest in U.S. real estate, since they are already doing so.

But even if the visa program does not encourage many people who wouldn’t otherwise buy U.S. property to do so, it may prompt those who would otherwise buy properties only for investment purposes to consider spending more of their time, as well as their cash, in the States.

The greater likelihood is that many affluent foreign buyers will jump at the chance to buy the right to reside in the safe, orderly United States along with their property. Attracting these moneyed residents will send beneficial ripples throughout the communities where they settle. The newcomers will need furniture and cars to go with their new houses. As they stay longer, they will spend money at restaurants and at clothing stores; provide work for condo employees ranging from housekeepers to security guards; and, most likely, many of them will bring friends and family to visit and spend their money as well. To avoid the common – though, I believe, spurious – argument that easing immigration takes jobs from Americans, the new homebuyers’ visas would not confer working privileges in the U.S.

The bill also includes a number of other provisions to make it easier for foreigners, especially those with money to spend, to enter the U.S. and to stay here. Chinese visitors, who now must apply for new visas each year, would get the opportunity to obtain five-year, multiple-entry visitor visas. A special program aimed at wealthy Canadian retirees seeking to maximize their time in the sun would allow Canadians over 50 to spend 240 days in the U.S. each year, extending a current 180-day limit. Other measures would create an expedited visa application process, available for a fee, and provide a discount visa application option to those who choose to tour the U.S. during the colder months.

The VISIT-USA Act will not provide an overnight fix for the housing market. It certainly is no substitute for wider-reaching, more comprehensive immigration reform. But it is a positive step on both fronts. And, with any luck, it will prove to be something that even our polarized politicians can unite behind.

All I have to say is “Willkomen, bienvenue, welcome!” Oh, and also, “Bem-vindos” (Portuguese) and “Huan ying” (Mandarin).

About Larry M. Elkin 533 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

1 Comment on A Welcome Mat for Foreigners Buying U.S. Homes

  1. I am looking to buy my first home on the San Francisco Peninsula, where high home prices are the rule. If a decent home becomes available for say, $470K, I’ll put a bid in on it. If a foreigner wants the same home, he’ll offer $500K all-cash. Guess who gets to buy the house?

    This is completely unfair to new home buyers who’ve waited for a decade for prices to come back down to Earth. I sat out the dot-com madness and said “No Thanks” to the subprime mortgage fiasco. Why should Washington make it easier for the Chinese to rob me of my one opportunity to own my piece of the American Dream?

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