U.S. Rep. Mazie Hirono’s bill that would allow the Chinese to apply for five-year multiple entry visitor visas to the United States has won bipartisan support as a potential boon for tourism.
But former Gov. Linda Lingle, Hirono’s opponent for U.S. Senate, has flagged a lesser-known provision of the bill that she says could have negative consequences for Hawaii.
Chinese and other foreign investors who spend at least $500,000 in cash to purchase one or more homes in the United States would be eligible for new three-year residential visas that could be renewed. The homebuyers, who would also be able to bring their spouses and children into the country, would have to live at a residence worth at least $250,000 for 180 days out of the year and would be unable to work in the United States.
The intent behind the provision is to provide an incentive for foreign investors to buy homes in markets on the mainland with a glut of housing after the financial turmoil of the recession.
In Hawaii, however, where the housing supply is low, and high prices have kept homeownership out of reach for many middle-class families, incentives for foreign investors who have the resources to pay cash up front could drive up prices.
"That’s going to create tremendous pressure here in Hawaii on housing prices," Lingle, a Republican, said Thursday in a debate with Hirono, a Democrat. "It’s a very bad aspect of that bill that hasn’t been talked about yet."
The median price for previously owned single-family homes on Oahu was $637,000 in September, according to the Honolulu Board of Realtors, while the median selling price for a condominium was $319,500.
Lingle mistakenly said during the debate that, under Hirono’s bill, foreign homebuyers would be eligible for green cards, which would enable them to live and work in the United States indefinitely. But Hirono and the bill’s other sponsors have said foreign homebuyers who receive residential visas would not be eligible to work or have a new path to citizenship.
Ted Liu, who was director of the state Department of Business, Economic Development and Tourism when Lingle was governor, and who still advises Lingle on economic issues, said he is a big proponent of encouraging more Chinese to visit and invest in Hawaii. But he said Hawaii has had prior experience with foreign investors who helped create real estate "bubbles."
"To me, the question is why would a Hawaii legislative representative do this to Hawaii?" Liu wrote in an email.
When Hirono and U.S. Rep. David Dreier, R-Calif., introduced the VISIT USA Act in the House last year, the focus was on easing visa hurdles and drawing more tourists from China and Canada to the United States. The five-year multiple entry visitor visa for the Chinese, in particular, was a highlight, because the Chinese are now only able to get one-year visitor visas.
But when U.S. Sen. Charles Schumer, D-N.Y., and U.S. Sen. Mike Lee, R-Utah, had originally introduced the bill in the Senate, the focus was on residential visas for foreign homebuyers. Schumer said in a statement at the time that the "concept has the potential to lift demand for the nation’s excess homes. Our housing market will never begin a true recovery as long as our housing stock so greatly exceeds demand."
Hirono’s aides have described the homebuying provision as narrowly tailored and meant to help address the problem of unsold homes across the United States. They said the fact that foreign investors have to pay cash up front — instead of purchasing homes through a mortgage — have to live in at least one of the homes valued at $250,000 for 180 days a year, and are unable to work, would likely dampen aggressive real estate speculation.
Betsy Lin, Hirono’s campaign manager, said the key to home ownership in Hawaii is a stronger economy and good-paying jobs. She said the bill could create 6,000 jobs in the tourism industry.
She also said that Hirono has supported preserving the home mortgage tax deduction, access to affordable loans through Fannie Mae and Freddie Mac, and the development of affordable housing.
"Mazie Hirono has always fought to make the dream of homeownership a reality for middle-class families and her record shows it," Lin said in a statement.
