UCLA’s Leamer: 5% rebates for home buyers

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A quickie: UCLA economist Ed Leamer argues in today’s New York Times for a 5% tax rebate for first-time home buyers, writing that the buyers will otherwise continue to sit out the market:

‘When it comes to housing, lower prices don’t inevitably cause sales to rise. Why? Because lower housing prices create the expectation of still lower prices later, causing buyers to wait for a better deal. Left alone, a weak market therefore overshoots with prices too low and construction too little. ... The only solution is for the federal government to offer a temporary 5 percent tax rebate — up to $25,000 — for first-time home buyers.’

Broken-record bloviation: In this region, where housing prices are demonstrably unaffordable to many working families, the government should not be propping up housing prices. The political goal of affordable housing can’t be reached if the government panics when housing prices begin to decline.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.

Hat tip: HV via e-mail.