Greenspan: How to Solve the Housing Crisis

The title may not suggest how this post is related to labor immigration, but it is.  In an interview with the Wall Street Journal, the formed Federal Reserve Chairman Alan Greenspan suggested that one of the easiest, yet politically difficult, ways to alleviate the housing crisis is by … a major expansion of the quotas for immigrant workers.

Here are his comments:

Public policy can hasten this process by not prematurely propping up housing starts and by expanding the underlying demand for homes generally. The most effective initiative, though politically difficult, would be a major expansion in quotas for skilled immigrants. Skilled immigrants tend to form new households, by far the most important source of new home demand. The number of new households in the U.S. is increasing at a rate of about 800,000 a year, of which about a third are immigrants. Perhaps 150,000 of those are loosely classified as skilled. A double or tripling of this number would markedly accelerate the absorption of unsold housing inventory for sale — and hence help stabilize prices.

Politics aside, it makes sense, as we notice first hand from our clients – many qualified and well-paid foreign workers are willing and able to buy properties and settle down, but they are deterred either by tougher lending standards for non-permanent residents or they are unwilling to invest a substantial amount of money not knowing whether USCIS would successfully, if at all, adjudicate their immigrant application which, in many cases, has been pending for five, six, or even more years.