I'm a big fan of immigration, and an old saying warns us that, "If your only tool is a hammer, everything looks like a nail." So you might be inclined to chuckle if I promoted immigration as a cure for U.S. real estate markets. Fortunately, Alan Greenspan is happy to take the heat for me:
"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."