Report: Home-builders lobby -- again -- for tax breaks for buyers
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A quickie from the Wall Street Journal today: ‘Home builders, including Stuart Miller, chief executive of Lennar Corp., are lobbying for a $15,000 to $20,000 tax credit to spur demand, saying the $7,500 credit passed by Congress in July has failed to jump-start sales.’
That sentence comes from a broader story about the housing market. The story, running under the headline, ‘No Quick Fix for Housing Prices,’ reports the bailout package doesn’t directly address the weak housing market, and airs various ideas about how the government might refinance mortgages or otherwise provide support to the market.
More:
But some economists say the government needs to do more to address the underlying problems that triggered the credit crisis. ‘It’s very disappointing’ that the plan doesn’t do anything ‘to stop the spiral in home prices,’ which is reducing net worth and creating a falloff in consumer spending, says Harvard University economist Martin Feldstein. He proposes that the federal government offer low-interest loans to replace 20% of homeowners’ mortgages.
Two cents: As measured relative to income, housing in California is too expensive at the moment. And income, in the aggregate, is probably flat to falling at the moment. So the idea that government might try to support housing demand raises two questions: Is the government capable of defying economic gravity and arresting the slide in housing prices? And, should the government try?
Faithful readers of this blog are probably tired of hearing my thoughts, but I will repeat them for the newbies: Government policy that supports housing at unaffordable price levels in California is wrong-headed. When that policy is endorsed by Democrats who claim to support ‘affordable housing,’ it is also dishonest. The housing market is trying to give the state more affordable housing, and politicians are trying to stop it.
Your thoughts? Comments?
--Peter Viles