Florida Governor Ron DeSantis has signed new legislation this
week that prevents foreign nationals in seven countries from purchasing what
the state considers sensitive land.
Now, in an effort to market this as some sort of heroic war against communism and
US adversaries, the Florida GOP is barring citizens of Russia, Iran,
North Korea, Cuba, Venezuela and Syria from buying farmland or
any property within 10 miles of a military installation, seaport or airport.
Here's DeSantis announcing the new rules with his trademark uncharismatic delivery.
>> The legislation, SB 264, will prohibit the purchase of farmland
in Florida by the CCP and other foreign countries of concern because
we believe protecting our food supply is a security issue, and
we want to make sure that our agriculture land is not compromised by CCP influence.
Now, the prohibition in that bill is not just limited to farmland,
it also includes land within 10 miles of any military installation or
any type of critical infrastructure.
>> Okay, look, I know this is just posturing for DeSantis.
He's trying to improve his chances of winning the Republican primary for
the 2024 election, and I think it's pretty obvious.
But there's more to this new law in Florida that Democrats have
misguidedly attacked him for.
And for the purposes of this discussion, I wanna focus on that.
As Axios reports, people from China who are not US citizens or
lawful permanent residents will be barred from owning Florida property altogether.
Anyone knowingly selling land in violation of the new regulations
is liable to civil and criminal penalties.
The legislation also creates a mechanism for
the property to be forfeited to the state.
Now, what's interesting is that very last line about the property possibly being
forfeited to the state is something that makes some Republican voters uneasy.
They're worried that that could be a slippery slope that grants too much
power to the government.
But other than that, they're like, yeah, we're totally on board with this.
To be fair, I'm on board with it to some extent as well, and I'll explain why.
What this means is that Chinese nationals who do not live in the United States,
along with China based corporations, will not have the ability to buy
any property in the state of Florida, and that includes housing.
Considering we're in the midst of a housing shortage and crisis,
I have no problem with that.
But our well to do friends over at Morning Joe think leaving our limited
housing supply vulnerable to private global investors,
some of whom are looking to launder money, by the way, is somehow more important.
>> Republicans are supposed to support free markets.
They're supposed to support free enterprise with Disney,
with cruise lines, with small businesses.
This is about as overarching big government social as government.
>> You just take an objective look at, okay,
why has this economy in this country managed to stay on top for so long?
And obviously, openness is obviously the reason.
It's the big factor.
Our openness to immigration, our openness to all kinds of free trade.
>> What?
Okay, first off, this has nothing to do with immigration.
And free trade a little bit of a mixed bag, actually a lot of negative
outcomes for American workers as a result of free trade.
But really, we came out on top because we allowed foreign nationals to buy
up our housing and price us out of the housing market?
Okay, now, Democrats argue that the new rules in Florida
are discriminatory against Chinese nationals.
And you know what?
I do agree with that take.
So my only complaint toward Florida's new policy is that it
would have been far better if DeSantis and
Florida state legislature expanded the ban to include all foreign nationals.
For me, this isn't about attacking China or any other specific foreign country,
it's about protecting Americans who have to live here and
can't afford housing due to housing shortages.
The problem is, DeSantis doesn't really care about the economic impact foreign
investors have on the housing market.
They're just ratcheting up adversarial rhetoric and policy toward China,
which Democrats, by the way, are also pretty guilty of.
However, foreign nationals buying up
our extremely limited inventory of housing is a problem.
Politicians in Canada, for instance,
noticed how much of an issue it was in their own country and have taken action by
limiting foreign investment to address skyrocketing housing prices.
In fact, some argue that they haven't done enough in Canada.
But let's get back to the United States.
In the US, Congress has allowed this practice to continue to
the detriment of the American people.
Back in April of 2021, we shared a Wall Street Journal story with you
that discovered foreign investors accounting for
nearly a third of institutional investment in single family rental homes.
I mean, you think having a landlord in another state is bad?
Imagine if they lived in another country.
At the time, German insurer Allianz was investing in a venture to
buy more than like $4 billion of US rental homes than their
Singapore like Singapore's sovereign wealth fund known as GIC,
was also backing a plan to purchase single family rentals across Southeastern US.
And the Journal accurately concluded that, quote,
the recent growth of foreign investment means that individual homebuyers
must increasingly contend with this deep-pocketed group of purchasers
in a number of prime US neighborhoods, boosting prices there and
adding more fuel to a housing boom that is already the hottest in 14 years.
Now, that was back in 2021.
Things haven't gotten any better since then.
From April of 2021 through March of 2022, foreign investors
bought $59 billion worth of existing homes in the United States,
an 8.5% increase from the previous 12-month period, stopping
a three-year skid in foreign investment in the US residential real estate.
And that slowdown in foreign investment occurred at the beginning of the pandemic,
but lately, we're seeing an uptick in foreign investment yet again.
Now, what makes it even more difficult for Americans to compete with
foreign investors is that while most of us need to apply for
a mortgage to finance the purchase of our home,
foreign nationals actually like to make all cash offers.
And you can't really compete with that.
Between April of 2021 and March of 2022, all cash sales accounted for
a whopping 60% of nonresident foreign buyers.
They've got the deep pockets.
That includes 58% of Chinese buyers.
And despite the popular notion that these wealthy foreign nationals are focusing
their investments in the luxury housing market, the reality is that they're
buying up homes that were historically purchased by middle class families.
According to the National Association of Realtors, the median price of
the homes foreign investors are buying is around $366,000.
Now, that's still a lot of money, but remember,
the price of housing has really skyrocketed in this country to the point
where $366,000 is a reasonable price for a home.
Florida, which has experienced a pretty sharp increase in housing prices,
has definitely been impacted by this.
For the 14th straight year,
Florida remained the top destination luring foreign buyers,
accounting for 24% of all international purchases.
California ranked second at 11%, followed by Texas at 8%,
Arizona at 7%, and New York and North Carolina, tied at 4%.
But what about Chinese investors specifically, the one group that DeSantis
has decided to ban from buying residential real estate in Florida?
Well, Chinese buyers accounted for 6% of all foreign US residential
real estate purchases from April 2021 to March of 2022,
according to the National Association of Realtors.
Buyers from China, Hong Kong and Taiwan spent $6.1 billion on those deals.
China and Canada, by the way, remained first and
second in US residential sales dollar volume at 6.1 billion and
5.5 billion, respectively, continuing a trend going back to 2013.
And they tend to buy the pricier homes in other states.
So, at just over 1 million, Chinese buyers had the highest average purchase price,
and nearly a third, 31%, purchased property in California.
Now, couple this foreign investment trend with private equity firms and
institutional investors buying up entire neighborhoods of residential properties,
and we're dealing with a pretty despicable and
outrageously unaffordable housing market.
>> We found that for housing vouchers,
which are local subsidies helping renters find homes on the private market,
the average wait in San Diego County is eight years.
And for public housing,
it has the longest wait time of any large metropolitan county in the entire US.
>> In San Diego County, the waitlist for public housing is over 18 years.
We're just not building public housing like we used to.
We're not providing enough housing vouchers for
people to use on the private market.
Today, what we're seeing is a housing crisis,
unlike one that we've seen since the mid 20th century.
>> That's right.
So if there is limited supply, and there absolutely is,
why are we letting people who don't even live here buy housing as an investment?
And look, don't get me wrong,
banning foreign investment would not solve America's housing crisis.
It would just tackle one factor contributing to it.
Institutional investors should also be banned, in the very least temporarily,
until we build more housing.
But what kind of housing we build is also incredibly important.
Look, it's not hard to find new luxury developments in a big city near you.
No one can afford those units.
The Biden administration and the entirety of the Democratic Party should
have gotten busy building public housing as soon as Biden got elected.
Instead, much like DeSantis, they just engage in political tit for
tat nonsense that really does nothing to alleviate
the economic pain felt by their constituents.
And so there's a lot to criticize Governor DeSantis on, banning foreign investment in
real estate, particularly residential real estate, just isn't one of them.