New Immigration Investment Program Could Drive Up U.S. Housing Costs

MarketWatch reports that real estate experts are warning that the new administration’s “gold card” program to entice wealthy immigrants to the U.S. could significantly impact the current housing market, driving up costs for American buyers. Similar programs in parts of Europe, the Middle East, the Caribbean, and Asia allow foreign investors to finance certain objectives within the country of their interest. In return, the country rewards them with legal residency and, at times, even citizenship. There is potential for this program to even replace the EB-5 program. Specific details of the proposed U.S. program are still unfolding, but in some markets where citizen-by-investment programs were implemented, home prices soared. Such countries include Portugal, Greece, and Spain, where 94% of visas are linked to real estate investment. The new administration’s gold card proposal comes when the housing market faces limited inventory and a persistent affordability gap.

The Impact: If wealthy foreign investors drive up housing demand, particularly in targeted geographies, the cost of corporate and personal relocations may surge there, making it harder for companies to secure affordable housing for employees. This shift could force mobility managers to reevaluate relocation budgets, require more aggressive negotiation with landlords and developers, and lead some to explore alternative housing solutions. With mortgage rates remaining stubborn, and housing affordability declining, this policy could add another layer of complexity to an already strained market.

The New Housing Squeeze: Rent Spikes in Formerly Affordable U.S. Cities

Rental cost increases have slowed nationwide over the past year, yet the burden of housing costs continues to weigh on many residents. According to USA Today, low and middle-class families pay significantly more to live in certain cost-friendly communities. Areas with the lowest average rents have seen a cost surge of over 7.5% annually. A rise in demand for affordable housing has prompted many residents to move from cities like Charlotte, NC and San Antonio, TX to Indianapolis, IN and Columbus, OH. This shift has driven up demand and rental costs, with the National Low Income Housing Coalition reporting a nationwide shortage of 7.3 million affordable rental homes. This increases the cost burden for the roughly 83% of renters who earn $30,000 a year and spend a third of their income on housing.

The Impact: As employees seek lower-cost housing markets, the increased demand in less expensive cities is driving up rental prices, making once-affordable options less accessible. Mobility managers may need to reassess housing allowances, explore alternative relocation benefits, and negotiate more flexible lease terms to accommodate rising costs. Additionally, with a national shortage of affordable rental homes, companies may face greater difficulties securing suitable housing for relocating employees, potentially impacting talent mobility and workforce planning.

D.C. Agencies Face Relocation Push Amid U.S. Cost-Cutting Measures

The new administration has urged Washington, D.C.-based federal agencies to downsize office spaces and relocate staff to less costly areas in the country, as reported by The Washington Post. With a mid-April deadline, agencies must find cheaper places to work from as the executive branch aims to cut government costs and reduce the federal government’s real estate footprint. This move could significantly impact the local D.C. area as the federal government accounts for 24.5% of jobs and 27.5% of wages. Commercial real estate is also expected to take a hit. Diana Parks, chair of the National Federal Development Association, representing landlords with federal government leases, said, “it would be devastating to most commercial landholders in the D.C. market. For all of it to hit the market in a short time, it’s just a supply-and-demand issue that’ll drive down the value of that real estate considerably.” However, relocations will take time, as many government leases cannot be terminated quickly.

The Impact: As agencies transfer staff to lower-cost areas, the demand for corporate relocation services will likely increase in targeted regions, creating new opportunities for mobility professionals. However, this rapid shift may put pressure on housing markets in these areas, requiring relocation experts to encounter challenges related to affordability and availability. Simultaneously, the decline of D.C.’s commercial real estate market could result in decreased relocation activity in the region, affecting service providers that depend heavily on federal contracts. Overall, while some areas will see an increase in relocation demand, others may encounter economic downturns, making it essential for mobility professionals to adjust to changing workforce trends.

Global Mobility Radar

CapRelo’s Mobility Radar provides valuable insights into trends worth monitoring. This month, we have detected important global mobility updates in Canada, China, and the U.S.

• International real estate company Re/Max has reached a $7.8-million class-action settlement with Canadian plaintiffs. This settlement involves two lawsuits that alleged price-fixing through buyer brokerage commissions. Although it is not uncommon for sellers to pay buyer brokerage commissions, plaintiffs argued that this practice deterred buyer agents from showing homes with lower commission offers.
• The U.S. government is proposing significant port fees on vessels linked to China, aiming to boost domestic shipbuilding and counter China’s dominance in the maritime industry. The plan includes charges of up to $1 million per U.S. port call for Chinese-operated ships and up to $1.5 million for Chinese-built vessels. These measures could disrupt global trade routes, increase shipping costs, and potentially increase consumer prices.
• Shockwaves are being felt within the global trade industry. New tariffs are already sending shockwaves within the global trade industry. The shipping sector is in crisis mode, worried that new tariffs could lead to higher consumer prices and further strain already struggling supply chains. The largest U.S. ports for China (Los Angeles and Long Beach) have begun stockpiling shipments ahead of the possible upcoming trade restrictions. The rush to stockpile shipments could lead to port congestion and delayed customs processing of shipments, impacting the delivery of household goods for employees relocating internationally.