Time to bring back the home buyer tax credit?
Panic is mounting as the downturn in the housing market picks up speed.
Check out the latest big spike in foreclosures across the state.
And, shocker of shockers, there are calls once again to bring back the home-buyer tax credit.
CNBC's Diana Olick offers an insightful round up of some recent statements by top Washington power brokers and congressional candidates that may be setting the stage for a return of the controversial federal handout to home buyers.
I guess I am torn between pumping more money into the housing market to prevent a complete collapse and edging back from all the supports and letting prices find their natural level.
But if more stimulus is needed, can't we do better than falling back on what turned out to be one of the more disastrous economic gimmicks of recent decades?
With the economy struggling and too many people still out of work, there is no way the housing market is going to be anything but sluggish for some time to come.
But the $18 billion-plus tax credit created the dangerous illusion of a return to a boom market, creating a frenzy of sales and price increases this spring by stealing from future demand.
The result was when the $8,000 expired at the end of April, it was bound to send what was already a fundamentally weak market into a tailspin.
And, as anybody who has followed real estate over the past several years, market momentum, whether up for down, can take on a life of its own.
Still, if the tax credit returns, you can bet there will be an attempt to dress up his worn out idea in some fancy new garb.
Olick, likely picking up on the latest chatter by government officials and members of Congress on the issue, speculates the tax credit, if it were to return, would be more targeted.
Instead of first-time buyers, a new and improved tax credit might instead be aimed at buyers interested in snapping up foreclosures and short sales.
Nice try, but it's still the same bad idea.
