A congressional proposal to issue visas to foreign nationals who buy U.S. homes could be a big boon to Florida's real-estate market.
Already the top state in sales to international buyers, Florida stands to benefit from the VISIT-USA Act proposed by Sens. Charles Schumer, D-N.Y., and Mike Lee, R-Utah.
The "Visa Improvements to Stimulate International Tourism to the United States of America Act" would grant U.S. visas to foreign nationals who purchase American residences valued at$500,000. Applicants, who must pay cash, can spend the entire amount on one dwelling or spend as little as $250,000 and invest the balance in other properties that can be rented out.
"This is a way to create more demand without costing the federal government a nickel," Schumer told the Wall Street Journal.
Incentivizing cash infusions from foreign nationals could be particularly beneficial to Florida, which has a large inventory of empty homes and has long been a magnet for international buyers.
Among the 50 states, Florida had 31 percent of the total international transactions last year, according to the National Association of Realtors. California had 12 percent; Texas 9 percent; and Arizona6 percent.
In July, about 5.5 percent of all home purchases in Miami were made by foreign nationals, according to MDA Quick Data.
Nationwide, foreign buyers account for about 3 percent of residential home sales. That equated to $82 billion in purchases in the year ending in March, up from $66 billion in the previous year, the NAR reported.
As slumping U.S. housing prices and favorable currency exchange rates continue to fuel purchases by overseas buyers, Schumer and Lee figure that VISIT-USA can kick-start sales that Americans will not or cannot close.
Noting that many U.S. colleges and universities have a significant number of international students, Realtors report that more foreign families are purchasing U.S. properties in college areas so their child has a place to live. Realtors say another source of international demand is foreign executives temporarily working in the United States.
The average home price paid by an international buyer last year was $315,000 compared with the overall U.S. average of $218,000, the NAR said. However, 45 percent of international purchases were under $200,000.
By creating a separate visa program for homebuyers, VISIT-USA places no cap on the number of visas it can grant.
"Many people want to come and live in the United States," Schumer said. "They will be here spending money and paying taxes, and the most important thing is they'll sop up the extra supply of homes we have right now compared to demand, and that's what's dragging our economy down."
Under the program, foreign buyers would have to live in the home for at least 180 days each year, which would require paying U.S. income taxes on any foreign earnings.
VISIT-USA visa holders wouldn't be able to work here unless they obtained a regular work visa through the normal process. Participants would be allowed to bring a spouse and children under 18, but must leave the country upon selling their properties.
For some affluent foreign nationals, restrictive immigration rules are "a deterrent to purchase here," Vero Beach real-estate agent Sally Daley told the Journal. She estimated that a third of her sales this year have gone to foreigners, an all-time high.
"Without them, we would be stagnant," Daley said. "They're hiring contractors, buying furniture, and they're also helping the market correct by getting inventory whittled down."
The NAR has yet to take a position on VISIT-USA. "Our staff is looking at the legislation," Leanne Jemigan told Sunshine State News from NAR's Washington, D.C., office.
The Florida Association of Realtors did not respond to requests for comment.
Thomas Donohue, president of the U.S. Chamber of Commerce,says the Schumer-Lee proposal could help.
"For too long, we have created barriers, and too many hoops and hurdles, which act to deter visitors from other countries coming to the United States to spend their money and create jobs. This is a loss we can ill afford in today's economy," he told the Los Angeles Times.
But Mark Krikorian of the Center for Immigration Studies questions the propriety of the home visa program.
"It's a ridiculous gimmick. We're selling access to America for money, and selling a handful of houses to Canadians isn't going to fix the economy," he said during a recent CNBC interview.
Other critics raise the specter of the "EB-5" visa program, which grants citizenship to foreign nationals who invest $500,000 in U.S. business ventures.
EB-5 has been riddled with controversy, such as a South Dakota case where one foreign national's investment created 17 jobs -- 16 of which went to illegal aliens. In other instances, investments have subsequently been shown to be substantially less than the $500,000 minimum.
Schumer and Lee point out that their program does not grant citizenship, but skeptics say that by opening the door to family members, VISIT-USA will expand and complicate Homeland Security's task of monitoring foreign nationals.
Weak government oversight -- combined with crafty immigration brokers leveraged by the Mexican, Colombian and Russian mobs -- has undermined the EB-5 program, critics allege, and they fear that VISIT-USA could invite similar mischief.
"Foreigners buying rental property?" muses Krikorian. "This is just too cheap. Why not charge more at least?"
Contact Kenric Ward at firstname.lastname@example.org or at (772) 801-5341.