One Idea to slow home price declines

by Tom Tousignant

in Blog, Home Buying

An interesting editorial in the WSJ proposes allowing immigrants to be allowed in the US if they buy a home – eat up the excess inventory, stabilize prices, buy furniture, start companies. If they sell or rent in the first two years, they have to return home, after 5 years, they would get permanent resident status.

Read more here: http://online.wsj.com/article/SB123725421857750565.html.

This is a bi-partisan idea that has a lot of merit – maybe add net worth, education, or job skills requirements – attract the best and brightest who are able to immediately contribute to society.

Prices are set by supply & demand – one of the first things I remembered learning from high school economics class – then the demand goes up, prices rise.  Right now, we have too much supply, not enough demand, so adding another 1 million home ‘demanders’ would tilt the supply and demand curve in favor of the demand side, and that would stabilize home prices, maybe even cause prices to increase in some areas.

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