Can Immigrants fix the housing bubble?

Richard Lefrak and Gary Shilling over a interesting proposal in the Wall Street Journal:

“Excess inventory is the mortal enemy of house prices, which have already fallen 27% since the peak in early 2006. We predict another 14% drop through the end of 2010 if nothing is done to eliminate the surplus.

A better idea is to offer permanent residence status to the many foreigners who are clamoring to get into the U.S. — if they buy houses of minimal values (not shacks). They wouldn’t need to live in those houses, but in order to remove the unit from the total housing market, they couldn’t rent them. Their temporary resident status granted upon purchase would become permanent after, perhaps, five years, if they still owned the houses and maintained clean records. The mere announcement of this program might well stop the ongoing collapse in house prices, especially in cities such as Las Vegas, Miami, Phoenix and San Francisco, where prices are down 40% — but where many foreigners like to live.”

So the idea is to let immigrants buy up the houses. This way, you would only attract productive workers and they would be able to find a place to live. Some people claim this would prevent them from being on the streets. This would act as a good litmus test to make sure the immigrants are getting jobs and not committing crimes. The only problem is whether or not this really work. I would imagine most immigrants, when they come to America, are not wealthy enough to purchase the houses. Hence why they came to America. It is a good thought but would it work in practice?

The rest is here.


Published in: on March 25, 2009 at 12:21 pm  Leave a Comment  
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