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October 21, 2011

Schumer sponsors bill to bail out housing industry by selling temporary visas to immigrant investors; wouldn't this distort the market (and maybe even help AY)?

Atlantic Yards Report

Apparently, essentially selling green cards through the questionable EB-5 program--under which prospective immigrants must create ten purported jobs with their $500,000 investment--was only the start.

Now Congress is considering selling three-year residence visas to foreigners who invest $500,000 in the housing market, and co-sponsor Sen. Chuck Schumer (D-NY) somehow thinks "it won't cost the government a nickel."

Schumer doesn't seem familiar with opportunity cost, the notion that we might choose a different alternative that could prove more beneficial.

For example, immigration analyst David North of the conservative Center for Immigration Studies thinks EB-5 investors should also have to buy a $50,000 U.S. bond for each visa issued. So why not ask prospective home purchasers do more than bail out the housing industry in exchange for those visas?

Schumer's proposal could have major unintended consequences, such as rising prices in prime areas (Hello, Brooklyn) while little impact on foreclosed subdivisions in, say, suburban Las Vegas. (See similar skepticism from a law firm involved in EB-5.)

But this bill, which requires investors to pay cash, will surely gain support from FIRE (Finance, Insurance, Real Estate), the pillars of New York City's uneven economy and, not coincidentally, Schumer campaign support. The founder of the Toll Brothers firm is already on board.

Heck, it just might goose demand for Forest City Ratner's unbuilt luxury condos in the Atlantic Yards project. After all, if the developer wants to sell condos in 2015 for $1217/sf--more than double nearby Atlantic Terrace, it sure helps if buyers care more about visas than price.

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NoLandGrab: Now there's an enervating idea.

Posted by eric at October 21, 2011 12:01 PM