Foreign Buyers May Assist In Housing Recovery
RENEE MONTAGNE, host:
A major problem in the housing market is oversupply - too many homes and too few buyers is a big reason for falling prices. Here with a noble plan to address the problem is economist Gary Shilling.
Mr. GARY SHILLING (President, A Gary Shilling & Co): The proposal that I have, and along with Richard Lefrak, a New York based real estate developer, is basically to sell these houses to foreigners. There are many foreigners in this country already. They've come in under student visas or what are called H-1B visas - that's the visas under which a number of people with scientific skills come in, work in high-tech companies. But anyway, a lot of these people would love to get permanent residency in this country, but they can't.
Our proposal is basically to say, if these people were to buy these houses, take excess inventories off the market, then assuming they have clean records and so on after say, five years, they would be allowed to have permanent residency.
MONTAGNE: Now I will not be the first one to tell you that there will be lots of people in a recession, lots of voters, actually, who would object to bringing immigrants into the country in the middle of a recession.
Mr. SHILLING: Well, bear in mind that a lot of these people are already in this country. It isn't a question that there are brand new people possibly taking jobs away from Americans is a concern. These are people who are already here, are working. What Richard Lefrak and I are proposing here, is in effect, to combine two issues. One is a huge problem of getting rid of excess house inventories with the idea of allowing these people who do have the skills, do have the professional expertise to remain in this country. And the idea is, in effect, to make this immigration issue much more palatable by combining it with a huge, huge national problem.
MONTAGNE: Is there any model for what you're talking about?
Mr. SHILLING: There are models. Canada has a program where if somebody takes $400,000 - Canadian dollars - and lends it to the Canadian government for five years, then they basically get an immigration visa. And in this country, if someone brings in a million dollars, and it's only half a million in a chronically depressed, area and starts a business that employs at least 10 people, then after two years that entrepreneur and his or her family can get permanent residence status. So these programs exist, not only abroad, but actually in this country, and what we're really talking about is a modification of the program.
MONTAGNE: Would you have high expectations that some version of this would ever go into effect?
Mr. SHILLING: We're having conversations now with members of the Congress who seemed to be receptive to these and we're hopeful. There is no question that there is an anti-immigration mood in Washington right now. But there was also a realization that there is a huge excess of houses, and that unlike all the attempts so far to modify mortgages with government assistance, this would not cost the taxpayer one thin dime. This is one of the few things that could be done with absolutely no cost to the government, to the taxpayers, at a time when people are talking about you know as Senator Dirksen might have said if he were alive today - a trillion here, a trillion there and pretty soon you're adding up to real money.
MONTAGNE: Economist and investment advisor Gary Shilling is President of A Gary Shilling & Company. Thank you for joining us.
Mr. SHILLING: You're most welcome.