Newly-proposed legislation that would grant resident visas to international buyers who spend at least $500,000 in cash on residential properties in the U.S. is one of the most intriguing ideas we’ve heard to help shore-up the nation’s hardest hit housing markets. The concept is part of a broader immigration package aimed at boosting foreign travel and investment in the U.S.
The bill, entitled The Visa Improvements to Stimulate International Tourism to the United States of America Act (or VISIT-USA Act), shows early signs of bi-partisan support; with it’s co-sponsors, Senators Mike Lee (R-Utah) and Charles Schumer (D-N.Y.), representing each side of the political spectrum.
Foreign buyers—particularly from Canada and Great Britain—have a strong propensity for purchasing vacation homes in Southwest Florida. Basically, the only thing preventing more of them from cashing-in on today’s reduced home prices are the restriction that typically reduces their annual stay in the U.S to the equivalent of six months—usually in 90 day increments. This bill bets that by removing this restriction baby boomers from around the world will join their U.S counterparts in retiring to Florida—with much of their accumulated wealth in tow.
The legislation proposes a three-year residential visa for foreign nationals who invest no less than $500,000 in residential real estate in the U.S. A minimum of $250,000 must be spent on a primary residence where the visa holder is required to reside for at least 180 days each year while faithfully paying U.S. taxes. The balance—or more—can be spent on other residential properties, which can be rented out. Moreover, buyers must pay in cash; thus placing no additional burden on our already stressed-out financial system.
Applicants will remain subject to the rigorous criminal and national security background checks that have been significantly enhanced in our post-9/11 world. Those with criminal records, suspected ties to terrorist organizations or drug cartels and other troublesome activities will be barred from qualifying. Once approved, applicants will not be eligible for such government benefits as Medicare, Medicaid, and Social Security. Essentially, the legislation creates an extended travel visa that will last for three years at a time, be subject to a strict renewal process; and not allow its recipients to obtain an American job or enter the path to citizenship.
Several of the bill’s tenets are specifically written to smooth the way for Canadian buyers. Presently, Canadians without a visa are not permitted to remain in the United States for more than 180 days annually, though many would undoubtedly retire here year-round if they could legally do so. Thus far in 2011, 25% of all international buyers in the U.S. came from Canada. That percentage is even greater in Florida where 39% of this year’s international home buyers have been Canadian—up 3% from last year.
The VISIT-USA Act doesn’t venture into unfamiliar territory hoping to create a market that doesn’t already exist. For the 12 months ending in March, sales to foreign buyers totaled $82 billion, up from $66 billion in 2010, according to the National Association of REALTORS®.
For Southwest Florida, where a real estate recovery has already taken hold in the lower price ranges, this legislation exactly targets the segment of our market that remains stubbornly weak: Homes priced from $500,000. Above that, there’s no spending limit.
“This is a way to create more demand without costing the federal government a nickel,” said Senator Schumer. “Our housing market will never begin a true recovery as long as our housing stock so greatly exceeds demand. This is not a cure-all, but it could be part of the solution.”
Its purpose, adds Senator Lee, is “to support a free market method of increasing demand for housing at a time when so many working-class Americans are underwater on their homes, are desperate for prices to rise again, and big-government programs have failed to work.” With the pundits agreeing that the speed of our overall economic recovery truly hinges on the pace of housing’s recovery, that’s a sentiment that people of every political and economic persuasion can get behind. Unless the bill ends up larded with too many pork barrel earmarks, we see very little downside to this legislation and look forward to tracking its progress through Congress.
