Get Government Out Of The Housing Market
Housing Market
I’m all for removing government intervention in the housing market. But I also understand the pain we might have to endure if we did it all overnight. Perhaps instead of constantly looking for new ways of intervening, the government ought to start down the road of reducing future intervention by making the future purchase of new homes (those that haven’t gone beyond the planning stage) not eligible for any type of government backed loans. If buyers can come up with enough down payment to satisfy lenders to provide a loan free of government support, fine. Otherwise, let buyers seek already built homes. This is critical to removing more new supply from a market stock full of foreclosures. This might have a positive effect on home values, while also starting us down the road of less government intervention. Read more 
Does The Housing Market Need More Oversight
housing market
Is Federal Reserve Chairman Ben Bernanke’s new found embrace of financial re-regulation patently political? It would certainly seem so.
I think the analysis that there wasn’t enough regulation is poppycock. Low interest rates spur real estate investing. It’s a historical fact. Real estate loans increase the money supply. Another historical fact. Increased money supply stimulates inflation, which benefits real estate investing. Historical fact. The reality of the regulation argument is it passes the blame which is a favorite thing for politicians to do. The easy way to prevent this problem is to have a Fed Chairman who isn’t in a politician’s pocket. Nobody in the Fed had the guts to put the brakes on before it blew up. Read more
#1 EZ Fix to The U.S. Housing Market
The U.S. government’s Wall Street bailout package, or should I use the PC correct term of “Government Rescue Program,” is not only a bad deal for the U.S. taxpayer, but in my opinion, totally unnecessary.
Last week, the largest Savings and Loan in the United States, Washington Mutual, was taken over in one day in a very, very smooth transaction. Combine that with the fact that in most real estate boom cities last month, real estate sales showed a dramatic increase. Of course the increase was due mainly to buyers purchasing bank owned and REO properties, but these two examples show that our free economic system works. When the price is right, buyers will step up and in many cases, purchase properties above the current asking price.
I think the general public, and Realtors in particular, have to a acknowledge that the boom years of 2000 to 2005 took real estate prices to artificially high levels due to the easy money, easy loan qualifying standards. Rather, should I say “lack of credible standards?” Now we are going through the payback period.
For the government to come in now with this huge bail-out, would just prolong the housing decline. I would rather see the government stand aside and let the market forces determine the true area average home selling prices.
For those who think a government intervention is the only way out, I would say do it without direct taxpayer money. The undisputed key to this recovery is housing. If the government truly wants to ignite a fire under the housing market, I personally would propose a very simplistic approach that would have immediate results.
The government should pass a bill that allows any home purchaser, owner-occupied or investor buyer, who buys a residential property within the next two years and holds that property for a minimum of three years (and a maximum of ten) to be free of federal capital gains taxes upon selling the property. The potential, tax-free profits on my idea would be a huge incentive for investors to jump back into the residential housing market. This increased demand would clear the built up housing inventory in a matter of months for most areas.
If the government is going to rescue anyone with this new bill, the rescue efforts should be directed not at Wall Street, but at Main Street. The problem today is falling home prices and the built-up inventory of properties for sale. Many buyers are standing on the sidelines. Most investors are totally out of the real estate market. My proposal will solve these problems without spending taxpayer funds.
Well, that’s my idea. I look forward to reading your comments on what you think about it.
Also, be sure to read these related posts:
Real Estate Emergency Rescue Package – The Devil’s in The Details
Are the Rating Agencies at The Cause of Our Financial Mess?
Housing Bailout – The Real Cause?
The Paulson Plan – Still Wrong
Government Bail-Out – Risk & Reward