How to Solve the Housing Crisis

Now, don’t take me too seriously here, but there is an easy way to solve the housing crisis. We have too many homes for people with the means to buy them to occupy them. We also have too much debt to foreigners that they don’t know what to do with. Well, let’s kill two birds with one stone: Make a one-time offer of green cards to any foreigner who is willing to buy a house in the U.S. worth $250,000 or more, free and clear.

There are many advantages to this proposal:

• The foreigners that come will be wealthy, and will contribute even more to the U.S. economy.
• They will appreciate the stability and freedom of the U.S., and will send back positive signal to their powerful friends back in the “old country.”
• Many will want a home in the U.S. for vacations. Others for a place to flee if politics turns against them in the “old country.” Either way, we get more of their money.
• If we want foreigners as citizens, we will be skimming the cream, rather than Emma Lazarus’ comments on the Statue of Liberty. (Now, if you want to know my heart, I like immigrants, especially poor ones… they work hard to make America great.)
• It solves problems in mortgage lending and the current account deficit in one fell swoop.

Now, this comes close to selling citizenship. I don’t want that; they would still have to take the citizenship test, and have the residency requirement. Personally, I would like all new citizens to know English as well as the 25th percentile in the U.S. does now (that's a low bar).

This is only partially serious; there are cultural aspects to immigration that are unpopular today. I would only say to those that don’t like an idea like this, is that your great-grandparents (or so) were openly welcomed here a century ago. Should we not welcome political, economic, and other migrants looking for a better life, even as our great-grandparents did? Or are we more stingy than a generation that welcomed our great-grandparents, even if they had stronger negative views against those of different ethnic groups?

Comments

[Big Bear La...:]

People who are losing their homes because they can't afford the mortgage shouldn't become homeless if they aren't losing their jobs as well. Instead they will go rent a house who someone else just lost and will benefit from lower rents. If they could afford the ARM mortgage for a few years they should be able to downsize a bit and afford reasonable rent. So don't cry for these people who gambled that housing would go up and lost. Some of us have been waiting to buy a house and are just waiting for what seems like a low point. The market will correct itself! Let the banks take the losses for bad loans. Messing with markets only helps some and hurts others. What about first time homebuyers coming of age in the next few years. Should they have to pay more for their first house because the govt bails out the people that can't afford their current mortgages?

2008 Mar 02 06:06 PM

[Vivek:]

There are around 700,000 legal immigrants within United Sates & their Green Card application is pending with USCIS due to bereaucratic delays. I know these High earning professionals( Software pros , doctors , consultants) & they have been delaying their decision to buy homes due uncertantity because of lack of Green card.
A immediate action from USCIS to process their application can certainly bring most of these Green Card applicants who are stuck in processing delay linbo to Home buying market. Just adding my 2 cents to what David Merkel is saying ...

2008 Mar 02 08:07 PM

[brokerbila:]

How to Fix the Housing Dilema

The problem continues growing because home values are going down. If we can stop this we can stop the meltdown.

Lets create an FDIC sticker for a home like the one on the window at the bank. It basically insures that if you put money in youll get money back later. Lenders currently protect themselves with PMI (Private mortgage insurance). We should make this available to home buyers, that if they agree to hold the home for a least X number of years that the value will be insured if they have to sell after that time. The owners could make a small payment per month to pay for the insurance. Buyers would not wait any longer to start buying again and this woulod put a floor of confidence under the market.

At some point in the future a smart insurance company who is already recognizing a bottom in the market anyway could step and make a lot of money at low risk.

2008 Mar 02 09:32 PM

[mallarde:]

I have a better idea: Let prices drop until Americans can afford to buy houses again. Those that must move to smaller houses will move and those that want to try to declare bankruptcy and keep their homes can do so. This would solve the real "housing crisis" -- no affordable housing for the next generation of Americans and a higher cost of living.

The idea of selling (any more than we already do) our soil to foreigners to maintain the artificially high housing prices goes beyond inane.

How amazing how ignorant Americans are of how fragile a civilization is. We can't see past our noses. Anything to avoid any pain in the near term. How many college grads lived with their parents 20 years ago?

2008 Mar 02 09:46 PM

[Taps:]

I echo David's thoughts. Also, the gentleman above, Vivek's comments makes sense. We already have highly skilled legal immigrants waiting in queue for several years. They are smart, high skilled, educated, legal, security cleared and more so contributing to US economy to keep it a world leader. Instead of inviting foreigners to invest in houses, why not let these skilled immigrants get conditional green card, if they buy a house and don't sell it for 2-3 years. I am sure that 700,000 houses will sell-out like hot cakes as soon as permanent residency is granted. I am sure this is an eye-opener for law makers, financial drivers and political folks. If green card is a show stoppper for these "potential home buyers", why look for buyers outside this country.

2008 Mar 02 09:54 PM

[pharma:]

Let us give a free market a chance:

- people who can not afford their houses shall lose them [otherwise, we will feel sorry for every single pizza delivery boy/girl who bought a Ferrari and can not pay for it]
- people who do pay for their houses should not be penalized for doing so [otherwise, everybody will stop paying for their houses]

It has to be remembered that over 90% of people are working hard to pay for and enjoy their houses.

Most importantly, America MUST stop living beyond their means. By doing so, the entire society social and economic fabric becomes terribly corrupted.

I think that the idea of foreigner are coming and paying in Cash for houses over $250, 000 is a great one. Instead of lazy and uneducated bums readily using the welfare system, America will get the best and brightest.

PS
The idea of giving Latinos special immigration privileges is outright racist! Why do we discriminate against Asians [Chinese, Indians, etc.,] and/or people from Africa?

2008 Mar 02 10:27 PM

[rajeev_bhar...:]

Hi,
I am an Engineer with Masters and bachelors degree in Electronics and Communications Engineering, Working legally for last 8 years..Still waiting for my green card. This country probably does not want engineers and doctors. There are close to a million Engineers, doctors, scientists waiting for the green cards for years now..some of them since 2000-2001.

I have been deferring my decision to buy a house just because I dont
have a green card yet. There are many many more who are not buying a house just because they dont have a green card yet.

2008 Mar 02 11:28 PM

[Peggy:]

Yet another interventionist plan to manipulate the market and thereby add to its dysfunction, aarrghh......

2008 Mar 03 01:37 AM

[User 159420:]

Dumb idea as it would never work. Foreigners with 250K in cash are not stupid to invest in a market that is declining both due to a weak dollar and a weak real estate market.

2008 Mar 03 02:33 AM

[New Zealander:]

You have some harsh critics ... this is a nation of immigrants .. ask any of the indian tribes or the mexicans pushed south ... or any hawaiian.
Most of the 1st gen immigrants I know are wealthy and employing americans !!
This brilliant concept which I love is similar to what canada did and they came in droves 10s of 1000s now Vancouver BC is thriving and the Canadian $$ is worth more than ours ... Good Job !!

2008 Mar 03 12:47 PM

[Michell:]

What a stupid idea? Selling the citizenship to the filthy rich and what will we do with all the people who loose their home. Pack them in a ship. Let the market correct itself and naturally make it possible for the average americans to afford a home. And let the greedy lenders from the housing boom suffer.

2008 Mar 03 01:17 PM

[New Zealander:]

Wake up the greedy lenders are out of business .. over 1200 banks have gone broke - out of business in the last 14 months.
Who said we should pack the homeless on a ship ???
We are talking about what ifs .. Canada tried this concept and have very few homeless ... We in America have the homeless problem.

2008 Mar 03 01:38 PM

[brick2008:]

That is the most retarded reason anyone can come up with to solve the GC issue!!!

likes of bin laden can easily sponsor a few suicide bombers to cough up 250k and inflitrate US....
but how many middle class educated hard working ppl from around the world will risk their family, their career and everything else to buy into this housing bubble!

2008 Mar 03 03:27 PM

[User 159730:]

The last thing we need is elitist foreigners refueling the housing bubble. Those who are already here and clammoring for Green Cards are wealthy enough to buy these houses because they purloined an American's career. Don't reward such opportunism, even if our goverment was in cahoots with them. And the teaming masses of rich will wreak as much havoc on our economic ecology as the waves of poor from the south. Let the market correct itself in the American way, as it is doing.

2008 Mar 03 05:43 PM

[Mr kumar:]

Hello,
The solution that david suggested may not be feasible.
However the point that vivek raised will be helpful immediately and instantly. Most of the people ( dunno the exact number ) have been patiently waiting for more than 8 years and deferring important decisions in life like buying a house for the simple reason, that they dont have a green card.
I will just give my example, I came here in 1997 to do a masters degree in US , obtained great experience and education for more than 10 years, however i still do not have the green card yet, Even though i have saved significant amount of money for a down payment and can easily afford any downturns in the housing market , i have chosen to rent instead of buying a house in expensive NJ.

Being in this situation ( i anticipate another 4 years or more before i get the card ) a lot of people like me are unsure of the comittment needed to purchase a house in the USA. If this situation doesnt improve a lot of people who can afford to buy , may make the decision to move back to their countries. which will take away much needed buyers with good credit from the market.

2008 Mar 04 11:05 AM

[Patrick C. ...:]

Excellent Start. At least your thinking out side of the box. If there were 10 people like you in upper level government we would not be in this situation. I found your report to be very insightful. I found your article while reseaching for my solution to the housing market. Your thought should be abopted as reqiurement for citizenship with modification, but would not stop the current crisis. Please take action with INS. You can do it. Good Ideas Die Without Action.

2008 Mar 04 02:31 PM

[Big Bear La...:]

It seems like most of the negative reaction above to allowing immigrants to buy is emotional (perhaps xenophobic, racist, patriotic), while the positive ideas are based on economic ideas.

I would like to know if you can find any American Citizens who are engineers or doctors who would oppose allowing green card holding citizens to buy homes. We need these people to stay!

The only risk to allowing the housing market to correct itself is that the downturn could snowball into a large recession.

Is there any movement to contact politicians and ask them, "Please do nothing. I want to buy an affordable home in the next few years?"
Please post it so we can act..

2008 Mar 05 12:11 PM

[User 124933:]

I think it is a good idea, sounds in a way like investment immigration. Support

2008 Mar 07 04:29 PM

[calvin gold:]

This is an EXCELLENT idea. It is one I've pushed and even emailed the news networks and Fed about. 250,000 British people leave the UK every year (mainly to Spain, Australia and New Zealand). They can not presently legally live in the US permanently. 250k just from the UK.
Open a 'window' to create urgency (eg. 12 months), ensure they live in the home, and pass all security checks, then after a period of time give them a green card. It will bring an end to the housing crisis within 6 months, bring short and long term benefits to the US, and save many americans their homes and jobs.

2008 Mar 29 11:23 PM

[akhil:]

David,

A little different take on the same subject,
not-bailout.blogspot.c.../

2008 Nov 18 08:33 PM