New Immigration Plan May Keep Foreign Buyers Away

A government proposal to establish greater control over people who visit the United States for pleasure has drawn fire from real estate interests.

The Immigration and Naturalization Service’s plan to limit the stay of foreign visitors could prove “devastating” to real estate markets, especially those with high concentrations of foreign ownership, according to the National Assn. of Realtors (NAR).

The nation’s realty professionals are all for efforts to protect the national security, said NAR President Martin Edwards. But ownership of vacation and retirement homes would be “far less attractive” to foreign buyers under the proposed changes. In accordance with rules that were designed to eliminate paperwork and have been in effect for years, visitors with B-2 visas can remain in the country for up to six months and can ask to extend their stays another six months before they must leave.

But in light of the Sept. 11 terrorist attacks, INS Commissioner James Ziglar now says it is necessary to better manage visitors to America by limiting the admission period to 180 days. Under the proposed change, instead of an automatic six-month admission, B-2 visitors would be granted a period of admission that reflects the stated purpose of the trip.

Because most non-immigrants do not have a stated need to remain longer than 30 days, the INS says in its proposed rule, it is reasonable to expect that most will depart within that time. If there is any ambiguity about whether a longer or shorter stay is fair and reasonable, a visitor could be allowed an extension for up to a total of 180 days. But the original determination or the decision to grant an extension wouldn’t be made until the visitor was about to enter the country. The plan “will lessen the possibility that an alien visitor will establish permanent ties in the United States and remain in the country illegally,” the agency said in its proposed rule.

But the 800,000-member NAR believes the proposal could introduce so much uncertainty that it could hurt real estate markets where foreigners own a large share of houses and apartments. “We are very concerned” that the proposed rule “could be devastating to our economy,” Edwards said.

No one tracks foreign ownership of U.S. real estate. But it is believed the heaviest concentrations are in Florida, California, Texas, Colorado and New York, and in such international cities as Chicago, Washington, San Francisco and New York. Foreigners purchase vacation, retirement and investment homes in America knowing they can visit for at least six months to a year under today’s rules, Edwards said in a letter to the INS. But the proposal “removes this certainty and replaces it with a moving target.”

The new process is “not only unworkable,” the Memphis, Tenn., broker wrote, “but it places these foreign owners and visitors in jeopardy of not knowing for certain how long they will be permitted to visit their properties.”

“This proposal will remove any incentive for a foreigner to purchase or to rent property in the United States,” he said.

Nancy Klock Corey said agents in the Miami Coldwell Banker office she manages have already lost two deals because of concerns about visas. She also reported that other potential purchasers “are not showing any interest in buying right now” because of the uncertainty.

Christopher Zoller of Essinger Wooten Maxwell in Coral Gables, Fla., said he’s already feeling the effect too.

In a letter to Sen. Bob Graham (D-Fla.) protesting the INS proposal, he said he has “clients from Europe and South America [who] are no longer interested in purchasing a vacation home in Miami” because they are worried about their visitors’ status.

Noting that many would-be buyers “are beginning to feel less welcome” in the U.S., Zoller said he anticipates losing perhaps as much as $3 million in sales this year because of the proposed rule. “We have to strike a balance between protecting ourselves and hurting ourselves economically,” said Corey, who estimates that foreigners account for 20% to 25% of all real estate activity in South Florida. The concern, though, is not just that foreigners will no longer purchase or rent houses in their favorite places. It’s also that they will sell what they already own rather than put up with immigration agency hassles.

“Many foreign property owners have already expressed concern to their real estate professionals about the future use of their property,” Edwards said. “Many have threatened to sell and go elsewhere.”

At Coronado Shores--a 1,465-unit condominium property in San Diego that has “a little bit of everything” in the way of foreign owners, including about 200 from Mexico--Ara Koubeserian, vice president of sales, said he hasn’t seen any fall-off yet in resales because of the INS proposal.

But it “could have a big impact,” he said.

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Lew Sichelman writes a weekly housing column that appears in newspapers nationwide.