How to Solve the Housing Crisis: Let in More Immigrants to Buy Houses
Aaron Task 19 December 2008
In order to prevent another disastrous wave of foreclosures and stem the decline in home prices, America should allow in more immigrants and give them incentives to buy homes, says Gary Shilling, president of A. Gary Shilling & Co.
A smaller version of this plan was successful in Canada and Shilling notes it could be combined with an expansion of the H1-B visas that Silicon Valley says are in such short supply.
If “letting in more immigrants to buy houses” sounds like a drastic step, that’s because drastic action is needed.
Because there’s too much inventory of unsold homes and not enough qualified buyers to soak it up, lower mortgage rates won’t save the housing market, Shilling says. That’s especially true with unemployment rising and a “deflation mindset” among potential buyers (i.e., the longer you wait, the lower prices will go).
A noted and notable bear, Shilling predicts the following will occur unless drastic action is taken:
* Average U.S. home prices will fall another 20% from current levels, bringing the peak-to-trough decline to 37%. * If prices ultimately do fall 37%, 25 million Americans — or about 50% of all U.S. homeowners with a mortgage — will be underwater, meaning their house will be worth less than their mortgage. * Millions of Americans won’t be able to make mortgage payments, even if they’re able to refi at today’s low rates.
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How to Solve the Housing Crisis: Let in More Immigrants to Buy Houses
Aaron Task
19 December 2008
In order to prevent another disastrous wave of foreclosures and stem the decline in home prices, America should allow in more immigrants and give them incentives to buy homes, says Gary Shilling, president of A. Gary Shilling & Co.
A smaller version of this plan was successful in Canada and Shilling notes it could be combined with an expansion of the H1-B visas that Silicon Valley says are in such short supply.
If “letting in more immigrants to buy houses” sounds like a drastic step, that’s because drastic action is needed.
Because there’s too much inventory of unsold homes and not enough qualified buyers to soak it up, lower mortgage rates won’t save the housing market, Shilling says. That’s especially true with unemployment rising and a “deflation mindset” among potential buyers (i.e., the longer you wait, the lower prices will go).
A noted and notable bear, Shilling predicts the following will occur unless drastic action is taken:
* Average U.S. home prices will fall another 20% from current levels, bringing the peak-to-trough decline to 37%.
* If prices ultimately do fall 37%, 25 million Americans — or about 50% of all U.S. homeowners with a mortgage — will be underwater, meaning their house will be worth less than their mortgage.
* Millions of Americans won’t be able to make mortgage payments, even if they’re able to refi at today’s low rates.
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