Recently released home (NYSEARCA:IYR) data revealed that the average new house sale price dropped to $242,300, which is the lowest its been since 2003. The credit bubble bursting and the glut of unsold properties have been responsible for the falling knife in housing. However, a new Senate bill takes aim at the housing supply problem.
In theory, the bill would increased housing demand in the U.S. by offering foreign investors a three-year homeowners visa if they invest at least half a million dollars cash and stay in the house for 180 days. Co-sponsor and Democrat, Senator Charles Schumer said, “We all know housing is dragging down our economy and the problem is basic supply and demand. We have to straighten out our immigration policy. Immigrants are good for America. We should not just have people who cross the border illegally.” The bill is also co-sponsored with Mike Lee, a Utah Republican.
Mr. Schumer also explained that his visa bill is not a path to citizenship, but those who come using the visa have the option of renewing it every three years as long as they stay in the U.S. Richard Lefrak, head of the Lefrak Organization, suggested this idea years ago. He sees it as a way to tap into the wealth of Asia, and makes it easier for wealthy Chinese citizens to visit the United States. “If we tap some of the wealth in Asia, think how it would help housing” in California, Las Vegas, Florida and other troubled real estate markets, Lefrak said. “Any bill that has the support of Sen. Schumer and Sen. Lee, on opposite sides of the political spectrum, means there’s some merit to the idea.”
It has been a rocky year for homebuilders as Toll Brothers Inc.’s (NYSE:TOL) reported a small glimmer of hope on Tuesday. Net income fell in the fourth quarter from a year earlier, but profit exceeded analysts’ expectations. The company reported net income of $15 million (9 cents per share), compared to $50.5 million (30 cents per share) last year. Revenue increased 6% to $427.8 million, while analysts were expecting $424 million. Douglas C. Yearley, Jr., Toll Brothers’ chief executive officer, stated: “Against a backdrop of U.S. government gridlock and persistently high unemployment rates at home, political and economic crises around the globe, and dramatic volatility in the capital markets, we produced our second consecutive quarter of pre-tax profitability and our sixth consecutive quarter of pre-tax, pre-impairment profitability.”
Here are the Top Stocks to Watch: PulteGroup, Inc. (NYSE:PHM), M.D.C. Holdings, Inc. (NYSE:MDC), D.R. Horton, Inc. (NYSE:DHI), KB Home (NYSE:KBH), Lennar Corporation (NYSE:LEN), Comstock Homebuilding Companies, Inc. (NASDAQ:CHCI), Meritage Homes Corporation (NYSE:MTH), The Ryland Group, Inc. (NYSE:RYL), and Standard Pacific Corp. (NYSE:SPF).