Republican Presidential candidate Jon Huntsman made an interesting point during last week?s Republican debate; an increase in legal immigration could turn around the depressed U.S. housing market.
An article from the Washington Post examines whether Huntsman?s push for more legal immigration is a feasible way to pump money into U.S. real estate. If Canada?s current housing market is anything to go by, Huntsman believes the U.S. could learn a lot from Vancouver, which currently has the fastest growing real estate market in the world.
?They allow immigrants in legally and it lifts all boats. We need to focus as much on legal immigration,? said Huntsman, at the Republican debate.
According to the Washington Post, Huntsman makes a strong argument. Studies show there is a correlation between the number of immigrants and an increase in U.S house prices. The publication reports that a recent Swiss National Bank study attaches a 1 percent rise in immigration to a 2.7 percent increase in the price of single-family homes.
However, as Toronto-based economist for Capital Economics, Paul Dales, points out, while an increase in the number of immigrants played its part in Canada?s healthy real estate market, it?s not the main contributing factor.
A combination of Vancouver?s influx of Chinese investment from overseas and the country?s commodities boom has likely had a more profound effect. Which makes it unlikely, at least in the immediate future, that the U.S. market will see much improvement directly from immigration either.
What role does EB-5 play?
Given the fact that there has been an increase in real-estate developers pursuing the EB-5 visa program for financing, the likelihood that the EB5 visa program will someday reach its 10000-visa cap and improve the real-estate market looks promising.
But considering that the EB-5 visa program currently approves only 4000 visas in an average year, this may take some time. Angelo Paparelli, a Los Angeles-based immigration attorney, told the Post that an alternative visa that focuses more on investment and offers immigrants ?something less than a green card,? as an incentive for buying U.S. real estate could generate interest from more immigrant investors.
The United Arab Emirates "has just done this with the three-year resident's visa," he told the Post.