New Incentive for (Foreign) Home-Buyers: Visas
I was listening to Marketplace on NPR last night and heard a compelling report about a bill coming up for a vote in the Senate that would grant visas to foreign buyers interested in buying homes in the United States. This, in the interest of “shoring up the housing market.”
Two things struck me about this report. One, the Phoenix-area Realtor that they interview for a sound byte is named, poetically, Ruth Sells. This is like the Realtor equivalent of Ochocinco. Except, I have no reason to suspect she changed her name like Chad did. The only thing that would be even more delicious is if Ruth’s middle name turned out to be “Less.” She does not look particularly ruthless in her picture, but let me tell you something about those headshots of kind-looking older women real estate agents: looks can be deceiving. If I had a dollar for every time I let my guard down for a Realtor who looked like a friend of my grandma, I might offset some of the deals I lost to deceptively shrewd knitter-negotiators.
The second thing that struck me is that the visa bill is for homes priced $500,000 and above. Even in some of the higher-priced towns around Boston, that will at least buy a pretty decent starter home. The sorts of homes in the rest of the country that are swept up in the foreclosure crisis would likely be a lot less expensive, or at least you would think that foreign home hunters would be looking for less-expensive bargains.
As an agent, my first instinct would be that almost anything that helps stimulate the market is a good thing. But I felt the same way as Anthony Sanders, the professor of real estate finance at George Mason University, who was quoted on the program. He points out that this is the sort of gimmicky, short-term thinking that ignores fundamentals and might even lead to speculative bubbles. It sounds like the government is aiming this incentive at second-home buyers and/or investors.
In market areas like mine, Lexington and the western suburbs, incentive for foreign buyers does not seem to be needed. So much of my business is with Chinese, Korean, Indian, and Israeli buyers and sellers — work visas in-hand or citizenship granted — many of them working in technology, biotech, or academia (the incentive program is for residence visas, not for work visas, by the way). About 25 percent of the students in Lexington public schools are Asian or Indian, more or less mirroring the town’s demographics (20 percent) in general. It is a delightfully diverse population in that regard.
ut if the government is going to start looking for gimmicky incentives like this, they should be aimed at the price segments that need the most help, which is not the $500,000+ houses.