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Plan to Solve Crisis: Let Immigrants Buy Houses

Posted Mar 19, 2009 03:52pm EDT by Aaron Task
Related: XHB, TLT, TOL, DHI, PHM, UUP, ^DJI
The Fed's actions to lower mortgage rates won't stop home prices from falling, because lower rates aren't enough to sop up the huge supply of excess housing inventory, says John Mauldin, president of Millennium Wave Advisors and author of the popular "Thoughts from the Frontline" e-letter.

Instead, Mauldin believes the U.S. government should pursue a controversial idea that's been floated a few times in the past year, including here by Gary Shilling, among others: give immigrants a pathway to citizenship if they buy a house.

The economic benefits of this concept are potentially powerful:

  • An inflow of foreign money into the U.S. economy, which will both boost the dollar and the economy because of related spending.
  • Help sop up the supply of excess homes on the market, which will help put a floor under prices and revive the construction industry, creating jobs.
  • Help shore up America's middle class. This assumes most immigrants with the money to buy a home are educated, white-collar workers who can help do what immigrants have done throughout U.S. history - energize the country as they pursue the American dream.
Note: Mauldin doesn't support giving financial incentives to immigrants or making citizenship automatic with a home purchase. We discussed whether this idea could ever fly politically. Mauldin believes that many Americans would welcome hard-working individuals into their neighborhoods to put a floor on their own housing prices and make the local economy thrive. What do you think?
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