FORCAST: A Solution to the Housing Crisis
Faceless corporations and foreign billionaires are turning America into a nation of renters. We can stop that.
Between skyrocketing housing costs, reports of corporate "housing dragons" gobbling up homes, and post-Ukraine backlash against Russian oligarchs laundering their blood money through US real estate — public attention on the dangers of foreign capital seizing our housing market has never been higher.
But what is foreign capital? In this context, "foreign capital" means any buyer of American housing that isn't a real person or part of our community. That includes faceless corporations like Blackrock that kicked off a feeding frenzy during the pandemic, buying up tens of thousands of homes to park their cash in. That includes foreign billionaires like the Russian oligarchs evading sanctions by stashing their dirty cash in US real estate. That includes the networks of shady shell companies that currently own over 3 million homes and 13 million apartments in the US, and rising.
As I write this in March 2022, the Treasury Department claims that a quarter of real estate purchases are now all-cash, and that at least $2.3 billion has been laundered through US real estate in the last 5 years alone. How can a family compete with faceless buyers able to pay above full asking price, on-the-spot, in cash?
Short answer: they can't.
But we don't need to sit idly by while faceless corporations and foreign billionaires steal our dream of homeownership and turn America into a nation of renters. We can fight back. States can act. If peers including Canada & Australia can deter foreign capital from their housing markets, so can we.
Here, I propose a "surgical strike" that any state in our Union could immediately deploy to protect our housing from foreign capital. I call it a "Housing Foreign Capital Stopgap” Act — or Housing FORCAST Act, for short. Let's see how FORCAST could work in a state like California:
Under existing state law (Rev & Tax Code, Sections 480-485), all real estate transactions must be reported to your local county assessor. Anyone buying housing property must file either PCOR or COS paperwork with your county assessor. PCOR and COS documents report some basic information about the property (including whether it is housing property) and the buyer (also called the "transferee".) Failure to fully complete and promptly submit PCOR or COS to your county assessor results in them slapping the new buyer with an up to $20,000.00 fine.
FORCAST makes 3 small, simple changes within this existing law:
Adds one extra mandatory element to PCOR and COS, instructing any buyer of housing property to provide proof that they are a "Real Domestic Person".
Increases the penalty for failure to fully complete and submit PCOR or COS to the full value of the housing property in question.
Defines acceptable proof that the buyer is a "Real Domestic Person" as any one of the following options:
The buyer's Social Security Number.
The buyer's ITIN, regardless of immigration status.
The buyer's Selective Service Registration Number.
The buyer's Drivers License.
The buyer's federally-recognized Tribal ID card.
The buyer's green card.
The buyer's STATE income tax returns for the 3 consecutive years immediately prior to the year of sale. (Federal income tax returns alone will not suffice.)
Through these 3 little amendments, FORCAST robustly deters foreign capital from buying up American housing because faceless corporations and foreign billionaires would not be able to provide proof of being a "Real Domestic Person" in their PCOR or COS documents, and would thus be penalized with a fine equal to the full price of the housing property if they bought it anyway. This not only deters prospective foreign capital from buying up US housing; over time it also retroactively incentivizes the divestment of all housing currently held by foreign capital buyers to be sold back into the hands of real Americans.
America is a beautiful, diverse community of real people who need real housing.
Any state that wants to protect our housing from faceless corporations and foreign billionaires should immediately pass a FORCAST law.