Wealthy Chinese citizens with half a million bucks to plunk down for a primary residence in the U.S. could soon be fast-tracked for a residential visa – and they aren't the only ones.
With a huge overhang of unsold homes slowing the recovery of the U.S. housing market, Senators Chuck Schumer (D-N.Y.) and Mike Lee (R-Utah) have added legislation to their new immigration bill that would offer wealthy foreign buyers a renewable, three-year residential visa – typically a laborious process – once they purchase a house in America.
The senators claim the initiative, which is part of their bigger VISIT USA Act, would remove bureaucratic red tape that stifles travel and investment in the U.S., especially for the Chinese, who face tougher visa requirements than other foreigners but spend about $6,000 per visit. Currently, Chinese nationals must apply for a new U.S. tourist visa every year – the same requirement for U.S. citizens traveling to China. But this bill would allow Chinese tourists access to five-year multiple-entry visitor visas in addition to expedited residential visas.
To qualify, at least $500,000 must be spent on U.S. real estate, with at least $250,000 of that on a primary residence. Thus, the bill would benefit a relatively small number of wealthy buyers who have the ability to pay cash and spend half the year at their new U.S. digs without a U.S. based job because the visa prohibits homebuyers from seeking employment, says Brian Phillips, Senator Lee's communications director.
Here's another catch: the sale price must be greater than the most recent appraised value of the property. The bill would also introduce videoconferencing as a means of screening foreign nationals for visas, and fees, including the $150 application fee, would be reduced during off-peak months. Applicants for the new visa would still be subject to standard criminal and national security background checks and, once approved, would not be able to receive government benefits such as Medicare, Medicaid, and Social Security. The program would not serve as a path to citizenship for foreign nationals. Chinese tourists with five-year visas would also be required to use the Electronic System for Travel Authorization, an automated procedure used to determine the eligibility of U.S. visitors.
National Association of Realtors (NAR) spokeswoman Leanne Jernigan says the organization has not yet taken a position on the legislation but prefers “comprehensive approaches to addressing the housing problems rather than piecemeal legislation.”
Foreign investment in residential homes nearly doubled from 2008 to 2010, to $64 billion, according to NAR. Chinese investment was also higher in 2010 than in previous years: It made up about 9 percent of international real estate purchases compared with about 5 percent in 2009, 7 percent in 2008, and 5 percent in 2007. The NAR says California is the top market for Chinese real estate purchasers, but it doesn't track individual sales. Phillips says critics of the bill claim it won't do much to save the housing market, and that it doesn't specify that purchases be made in markets that need it most. But Senator Lee “doesn't want to write legislation...that tells people where they can spend their money,” Phillips says.
While China's ultra-rich have been buying property in the U.S. for years, of late many Chinese lawyers, real estate developers, and corporate executives are visiting the U.S. on special buying tours in search of bargain deals in U.S. real estate, according to SouFun.com, China's largest real estate search site for domestic and overseas real estate. SouFun.com organizes 50 trips annually on “home inspecting” trips abroad, and the company claims on its Web site that they are the best way to attract Chinese buyers. Rising Chinese income levels and plunging American real estate prices since 2006 have made attracting Chinese buyers easier.
The U.S. Chamber of Commerce, which has endorsed the visa changes, says making it easier for international visitors to visit the U.S. is a priority with the goal of creating an additional 1.3 million jobs by 2020. “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,” said U.S. Chamber of Commerce President and CEO Thomas J. Donohue in a statement. “This is a loss we can ill afford in today’s economy.”