According to real estate professionals and those who have researched comparable immigration incentives in Europe, President Donald Trump’s attempt to entice wealthy immigrants to the United States with a “gold card” scheme could increase property prices and exacerbate America’s housing-affordability crisis.
Trump’s plan would offer a route to citizenship to foreigners who spend at least $5 million in the United States. Similar programs, but at a lower cost, are currently available in the United States. According to Trump, the initiative might draw in 10 million “highly productive people” and bring in enough money to settle the national debt.
Experts who have examined current citizenship and residence-by-investment programs in over 100 countries say that if wealthy foreign investors can invest in real estate to qualify for the visa, that could directly raise home prices in the United States, even though there are currently few details on the kind of investments that would be required through the gold card program.
A request for comment regarding the proposed program and its possible effects on residential real estate was not answered by the White House.
“That overheats the real-estate market and makes it very hard for the locals to live where they used to live,” Basil Mohr-Elzeki, managing partner at Henley & Partners North America, a firm that advises wealthy individuals who wish to participate in citizenship-by-investment programs, told MarketWatch when foreign investors purchase residential real estate, especially in city centers. As a result, some nations have changed their citizenship-by-investment initiatives to include less real estate-related content.
Would the implementation of Trump’s gold card program cause housing values to soar similarly in the United States? Experts suggest possibly. According to Lawrence Yun, chief economist at the National Association of Realtors, home prices could increase if Trump’s program is implemented, even if it is not specifically focused on real estate investment. This is because, in theory, only ultrarich individuals could afford to pay $5 million for the visa, he told MarketWatch.
“I’m sure that if they can come up with $5 million, they probably have a little extra to buy real estate,” he stated. “So it will bring about more demand in the ultrahigh end of the real-estate market.”
The operation of ‘golden visa’ schemes
There are so-called golden visa schemes in many different parts of the world, including the Caribbean, the Middle East, Europe, and the Asia-Pacific region, which includes Australia and Hong Kong.
All of these initiatives work on the same tenet: Foreign investors contribute money to a designated fund established by a government to support a certain goal in exchange for legal residency and occasionally even citizenship in that nation.
According to Mohr-Elzeki, the term “golden visa” is a marketing slogan used to describe visa programs that let investors avoid the difficult and drawn-out process of obtaining legal residency in another nation.
However, the programs’ structures vary greatly.
Certain nations permit foreign capital to be used for local business investments. For example, New Zealand offers an Active Investor Plus Visa that, in exchange for permanent residency, requires a minimum investment of $2.8 million (NZD 5 million) over four years into unlisted New Zealand enterprises.
Many investors have found this to be an appealing alternative as some schemes let foreign capital investment in real estate in exchange for residency. For example, these schemes have been used by many wealthy Americans to relocate overseas in pursuit of a higher quality of life, fewer taxes, a cheaper cost of living, and other benefits. According to Mohr-Elzeki, Americans frequently go to Europe or the Caribbean and seek for passports that provide protection from geopolitical risk.
For instance, in exchange for residency in Greece and visa-free travel throughout the 29 nations that comprise the Schengen Area in Europe, investors can purchase real estate in Greece. To get additional money, they can also rent out the investment property.
In several countries, “golden visa” initiatives have contributed to an increase in house prices.
The housing markets of various nations have been impacted by these citizenship-by-investment initiatives, sometimes with detrimental impacts on the local populace.
After the global financial crisis, Portugal’s quest for foreign investment unintentionally increased the cost of real estate for its citizens. A professor at the University of Lisbon named Joao Pereira dos Santos co-wrote the article “All That Glitters? Golden Visas and Real Estate: Based on his examination of transaction data, he told MarketWatch that one of the factors driving up high-end property prices in Portugal was the golden visa program.
Portugal offered residency in exchange for investment, mostly in real estate, for a minimum of 500,000 euros when its program was implemented in 2012.
According to Dos Santos, “for people who bought a house in 2012, 2013, 2014, this was a very good deal,” despite the local real estate market being down. “In less than 10 years, house prices doubled in Portugal, especially in more [tourist-friendly] areas and urban centers like Lisbon.”
Following tens of thousands of applications, the co-authors discovered a notable rise in the number of houses sold at that price, indicating that home owners were purposefully setting their prices at that level to meet the conditions of the golden visa for investors. The authors claimed that this caused a “distortion” in the real estate market.
“While the golden visa scheme has been successful in attracting foreign investment, it has also led to unintended consequences in the real-estate market, including price distortions and public disapproval, particularly in urban areas like Lisbon,” they stated.
According to Dos Santos, the argument is not that the golden visa program directly increased property prices, but rather that it was a component of a larger set of initiatives that brought in money and increased demand for properties from wealthy people, and since supply could not keep up with demand, prices increased.
Spain, which has more than four times as many people as Portugal, saw the same phenomenon of foreign capital driving up property prices. Last year, Spain stopped providing golden visas to foreigners purchasing homes due to a dramatic rise in the cost of real estate for Spanish nationals.
At the time, Prime Minister Pedro Sanchez stated, “Today, 94 out of every 100 such visas are linked to real-estate investment… in major cities that are facing a highly stressed market and where it’s almost impossible to find decent housing for those who already live, work, and pay their taxes there,” Per Reuters.
After Greece launched its golden visa scheme, real estate sales and rents skyrocketed, according to Euronews. According to Themistoklis Bakas, CEO of the real estate portal E-Real Estates Network, prices have increased to the point that permanent residents are unable to purchase homes, Euronews said.
The U.S. housing market is already experiencing an affordability issue, which coincides with Trump’s gold card idea. With home prices reaching all-time highs and mortgage rates hovering around 7%, many prospective homebuyers are excluded from the housing market. The large affordability gap in this Federal Reserve Bank of Atlanta figure illustrates how the ordinary American worker does not earn enough to buy a median-priced home.
The Trump administration has made immigration reform a top priority, and both President Trump and Vice President J.D. Vance blamed illegal immigration for the high cost of housing during the campaign.
Although these mortgages are rarely granted, Trump stated in September that he would make housing more affordable by outlawing mortgages for undocumented immigrants. Vance claimed at the October vice presidential debate that the reason housing has become “totally unaffordable is because we brought in millions of illegal immigrants to compete with Americans for scarce homes.”
Certain ‘golden visa’ programs prohibit investing in real estate.
While they still hope to draw in foreign investment, some nations that provide golden visa programs have made it clear that their real estate is not for sale.
Investors with startup ideas can apply for residency in Canada through the “Start-up Visa Program.” But last year, the country, which is also facing a severe housing affordability crisis, prohibited foreigners from purchasing real estate.
In a similar vein, foreigners in New Zealand have been prohibited from purchasing real estate without authorized by the government since 2018. However, local media outlets have reported that this restriction may be loosened.
According to Dominic Jones, chairman of Greener Pastures New Zealand, which provides advice on investment residency in the country, “it’s very hard for a foreigner to buy property in New Zealand,” MarketWatch said. He pointed out that investing in other asset classes, including stocks or bonds, can instead lead to permanent residency in New Zealand.
The ‘gold card’ initiative may also have an impact on housing costs.
The Trump administration has hinted that the EB-5 program, another current route for foreign investors to get residency in the United States, may be replaced by its gold card scheme. Congress established it in 1990 to boost the American economy, and it grants visas to those who invest at least $800,000. The maximum number of participants per fiscal year is around 10,000.
