Are immigration laws stymieing South Florida real estate?
Immigration is a hot button issue in the 2008 presidential elections, but long after the votes are counted the real estate industry may still be pressing for immigration reform of a different kind.
That’s because some realtors believe current immigration laws, including those dealing with visas and drivers’ licenses, are putting a brake on foreigners interested in investments and second homes in South Florida. Others say the issue is a red herring, a knee-jerk reaction from the real estate community reeling from a downturn. Still others say the bigger issue is immigration’s impact on business.
“The real estate market is obviously going through a terrifically horrible time and there are many other issues that need to be addressed,” said Roy Barquet, a partner at Foley & Larder LLP in Miami.
“Immigration issues are on the periphery of the real estate issue,” he continued. “Immigration law is not having a chilling effect on real estate.”
But some realtors strongly disagree. Their complaints include: foreigners’ difficulties getting long-term visas, a long and rigorous immigration procedure upon entering the country, and driver’s license mandates.
Stefan Bolsen, managing director of Engel & Voelkers Florida headquarters, said Congress doesn’t seem to understand the consequences of these challenges on the local real estate economy.
“As we all know, the procedure of selling is highly influenced by psychology and investors tend to act in herds,” Bolsen said. “If the herd starts to run, everyone follows and the European investor could be the spark to start the engine.”
Bolsen is speaking about the immediate term, which others say is debatable. But what about the long-term? According to the Joint Center for Housing Studies (JCHS) at Harvard University, 20 percent of homebuyers in 2006 were new to this country.
The JCHS predicts the outlook for household growth is about 14.5 million from 2010 to 2020, barring any serious economic decline. The main risk to the long-run outlook, JCHS notes, is a dip in the level of immigration from its recent 1.2 million a year pace due to weaker labor markets.
Gateway cities like Miami, Los Angeles and New York, which see the most immigrant homeownership, would suffer the most. Florida has seen about 333,000 immigrants settle here in the last 10 years, reports the Federation for American Immigration Reform.
Bolsen, for one, would like to see some changes. For example, he’d like to see a visa waiver treaty put in place for certain countries. A visa waiver treaty would allow foreigners to stay in the U.S. for a three-month period without a visa.
Another potential hurdle is the entry process into the States.
“Our foreign clients travel mostly for about 10 hours before they arrive in Florida and they then face rigorous immigration procedures. Some immigration officers have treated our investors like second class people and question their intent to stay in the U.S.,” Bolsen said, noting, by contrast, the Schengen Agreement between Germany and Spain that eliminates the border control issue.
Bolsen is also hostile toward driver’s license laws that impact foreign buyers. When foreigners arrive in the U.S., Form 1-94 is attached to their passport with an entry and expiration date. If the foreigner stays longer than the expiration date, it can cause re-entry problems and other penalties.
“We have lots of Germans in town, looking for Florida real estate because we are experiencing a unique historical phenomena. Both cycles – the U.S. currency exchange and the U.S. housing market – are low at the same time,” Bolsen said.
“Europeans see the profit and we should do everything possible to attract them. We all know how fast the currency exchange rate could change,” he continued. “Time is of the essence.”
Barquet, again, disagrees. Blaming immigration for throwing a cold bucket of water on the market is off base, he said.
“Focusing on the immigration issue will only distract form the real issues of the subprime mortgage mess, developers pushing condo towers and politicians recklessly giving tax credits to developers,” he asserted.
Barquet, however, does agree that immigration is putting a damper on businesses looking for talent, and that could have a periphery impact on home sales.
Oscar Levin, a shareholder in the business immigration and compliance practice in the Miami office of Greenberg Traurig, puts it a little more strongly.
“The current immigration laws are throwing the baby out with the bathwater,” he said. “Our immigration laws are going to continue to hurt the local economy. Everyone in the United States will suffer until people wake up to the balance between legitimate law enforcement and legitimate business needs.”