He did offer one suggestion: "The most effective initiative, though politically difficult, would be a major expansion in quotas for skilled immigrants," he said. The only sustainable way to increase demand for vacant houses is to spur the formation of new households. Admitting more skilled immigrants, who tend to earn enough to buy homes, would accomplish that while paying other dividends to the U.S. economy.
He estimates the number of new households in the U.S. currently is increasing at an annual rate of about 800,000, of whom about one third are immigrants. "Perhaps 150,000 of those are loosely classified as skilled," he said. "A double or tripling of this number would markedly accelerate the absorption of unsold housing inventory for sale -- and hence help stabilize prices."
From Greg Mankiw.
I thought a similar thing a few months ago. Well, not the same thing because I was thinking about "illegal" immigrants as well, but that isn't as politically palatable as just focusing on skilled immigrants. It was in relation to a blog post on the AJC about how many homes are vacant because unskilled immigrants are returning home (or simply moving on) due to the lack of jobs/enforcement. The result is that the values of those homes still occupied are falling. The question was raised of whether someone would rather have their homes lose value or have illegal neighbors. The overwhelming response in the comments was that people would rather have their homes lose value. I was kind of shocked, but kind of not.
In the end, instead of trying to artificially boost demand, Congress should simply reduce (heck, remove) the artificial constraints on demand.
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