How Immigration Policies Can Make or Break Real Estate

Experts watching the international market say anti-globalism attitudes could have serious consequences for foreign investment in the U.S.

The shifting ideology from globalism to nationalism in the U.S. and other countries may threaten the health of the international real estate market in the long run, experts said during the Global Alliances Forum at the REALTORS® Legislative Meetings & Trade Expo. But it may be a while before the effects are felt.

So far, not even President Donald Trump’s travel ban—a veritable crackdown on immigration into the U.S. from Muslim-majority countries in the Middle East, which was struck down in federal court—has appeared to tamp down foreign interest in U.S. real estate, said Lawrence Yun, chief economist of the National Association of REALTORS®. However, NAR is watching closely whether Trump’s overall immigration policies will have a negative impact on foreign investment in the future.

“There’s a focus on anti-globalism right now in country after country,” Yun said. “The Brexit vote can be partially explained by that phenomenon. But even though there’s this movement, we are still seeing a general rise in foreign purchases of U.S. real estate.” He teased NAR’s next Profile of International Home Buying Activity report, due out later this summer, by saying there was a “large jump” in recent immigrants and foreigners purchasing vacation and investment properties in the U.S. last year.

Trade is also a hot-button issue with potentially expansive ramifications for the foreign-buyer market. Trump has promised to renegotiate America’s trade deals with several major import countries, which could restrict foreign buyers’ investment power in the U.S. if there are too many restrictions, said Scott Tatlock, executive director for China and Mongolia at the Commerce Department. But Tatlock cited Trump’s recent deal to open avenues for meat imports, among other products, from China as promising sign. Keeping that  relationship  strong would continue to benefit foreign real estate investment in the U.S., he said.

Chinese buyers, who are particularly driving the international market, are continuing to find U.S. real estate to be a safe investment, Yun noted. “In China, the government can take over a property at any time, so people feel more secure in the U.S.” Yun added that NAR’s upcoming report will show a greater geographical spread of home purchases by foreigners than in the past.  He singled out Tampa, Fla., and college towns in Indiana as hot up-and-coming markets.

Still, Trump’s stance on immigration is making policy watchers nervous about the future of some programs aimed at boosting foreign investment, said Russell Riggs, senior regulatory representative for NAR. For example, the EB-5 Immigrant Investor Program, which offers a path to citizenship for foreign investors, recently was reauthorized through Sept. 30—but its future beyond that is unclear, Riggs said. Since 2003, the program has helped add $3.1 billion in foreign cash to the U.S. economy, he noted. “We have a lot of work to do to secure this program’s future,” he said. “We don’t want to see it go away.”