From Business Insider: T2 Lays out a Case for Double-Dip in House Prices.
All too likely of a scenario Chuck. Last nights 60 Minutes piece here:
They say God looks after drunks, fools and the United States.
I see huge pools of capital forming worldwide, especially in the Far East. This will keep interest rates low for generations. There is not enough places to invest all this capital. If you want security in bonds, you will have to accept small negative returns.
This is good news for property. Periodically, property will become hot. Anthony Downs called this a Niagara of capital, and it will only grow in volume. In 10 years, China;”s economy will eclipse that of the US, and they have much higher savings rates. Also, little known, anyone can become a US citizen if they bring $1 million into the US.
So, SoCal housing prices are headed north, for a long, long time.
So your conclusion is based on the premises of an influx of wealthy foreigners coming to southern California?
I know you’re referring to the EB5 Visa program, right?
There are a number of things you need to know to understand that…
some of them include only offering 10K per year, and $1M would be a minimum investment, more likely much more since it also has to cover the hurdle of employing at least 10 people permanently by using that money to start a business. The EB5 visa is 2 years, and if the conditions aren’t met after 2 years, the person gets deported.
and, it’s a visa, the person still needs to go through the naturalization process anyway.
Needless to say, we haven’t had too many go through with an EB5. Why? you may ask…
1. Most foreigners who are wealthy already live quite well, and better than they could here in the US.
2. Most have companies that are successful in their local areas so leaving is not an option unless they sell out to another local businessman, who must come up with the funds to buy their business.
3. $1M is the minimum hurdle, as employing 10 people long term is a much higher hurdle, and only assures the visa, not the citizenship. It’s not as easy as you make it out to be.
4. There aren’t really that many millionaires, there is much greater disparity in many other emerging economies. Even in china, there are so few compared to the hundreds of millions of indigent poor. Same with every other place.
Besides, why start a company in the US being tied to employing 10 overpaid workers here, when they can do it elsewhere in the world?
Oh, yeah, and don’t forget, it expires in 2012: