I wrote several days ago about the effects of two rounds of homebuyer tax credits: how much they distorted seasonal demand, and how difficult it is now to predict how long the post-incentive lull will last:
Today, an article from the Los Angeles Times appeared in the Austin American-Statesman:
It includes discussion of whether/how the government might continue trying to help, but as I ended my post on the subject (Stop helping!), this article concludes with excellent advice:
“Leave housing to market forces, let prices fall until buyers are motivated to come in, and hope that the economy can stand one final cathartic wave to clear the excesses of the bubble.”
This seems completely obvious to me, but then I have argued against these tax incentives since the very first rumor in 2009. With very rare exceptions, markets are inherently smarter than the bureaucrats who seek to control them. I have no doubt that the more the government tries to help the real estate market, the longer and deeper this downturn will be. Let’s just let it be. This too shall pass!