What is it about making sequels to bad movies? You have to agree, it’s one thing to remake an old movie, or make a sequel/prequel to a good movie, but there is nothing worse than sequels to movies that were junk to begin with.
So, when I heard a few higher-ups in HUD and the Obama administration floating the idea of a second home-buyer tax credit, I was understandably surprised. Considering that the first credit showed little to no measurable positive effect (especially in retrospect) and may be responsible for the recent record lows in new and existing home sales, you would think that we had learned our lesson about these types of interventions.
Now look, I’m all for stimulating home buying, but I think we are getting into “Honey, I Shrunk the Baby” territory here. This is, at this point, rumor – but if you will bear with a bit of speculation, but I have to agree with our friends over at Calculated Risk – the best thing for housing would be for our administration to definitively say “There will be no more Housing Tax Credits”. In a market with this much volatility, we need our leadership to help this market stabilize before we can grow. The financial doctors on Wall Street and in DC are ignoring the heart attack and treating the arm pain – as any good doctor will tell you, you fix the problem first and deal with the symptoms second, and you never give a junkie a prescription for drugs.
Any other failed government policies that you think need a sequel? Or perhaps some ideas of how the government can be helpful to the market?
Edit: Calculated Risk found this CNBC report from Diana Olick: HUD now says that “there are no discussions underway to revive the credit.”
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Geoff Boyd – PrimeLending – Clackamas, OR