The latest insane idea (and there have been so many of them they are hard to keep track of), is from Sen Johnny Isakson who proposes $15,000 Rebate Checks For All Home Buyers.
As a longtime realtor in Cobb County, Sen. Johnny Isakson has seen housing downturns before. “We had recessions in 1968, 1974, 1982, and 1991, by every measurement, this is going to be a deeper and bigger recession in residential housing. It’s a significant event.”
Isakson is pitching an idea to his colleagues in Congress: a $15,000 tax rebate check to anyone who agrees to buy a home. Congressional budget analysts project the program would cost $14 billion over the next few years. But Isakson said the rebate checks are well worth the hefty price tag. “If we can convince buyers to come back to the marketplace and buy these houses, then the houses aren’t vacant. It’s replaced by an owner-occupant, who is there making payments on a loan and helping all of the other houses around.”
Senate Republican leaders have signed on to the rebate check idea. But they have to corral support from Democrats. Senate Democratic leader Harry Reid is instead pushing a foreclosure relief proposal called The Foreclosure Prevention Act of 2008, which would offer $4 billion to cities to rehab or knock down foreclosed properties. Reid’s Democratic colleague Sen. Bob Casey said, “It’s important that we have as much money as possible in the hands of local communities, to get it into communities, where they know how to spend those dollars and help families through this crisis.”
This proposal is unsurprisingly from someone who just happens to be a “long time realtor”.
And before anyone considers such insanity at taxpayer expense, it is important to remember why we are in this mess in the first place. The answer is government enticement and promotion of housing even when it made no economic sense.
There is no economic justification to buy a house until prices fall to levels supported by local wages. $15,000 is not going to entice anyone to buy, except of course a $500-$10,000 home in a slum somewhere like Detroit for an instant profit of $5,000 to $14,500.
Housing is over-bought, over-loved, and over-sponsored by complete fools like Sen Johnny Isakson. Of course 99% of the Realtors in country are no doubt in favor of this handout. And to be fair, everyone wants a handout at everyone else’s expense.
68% of the country already owns their own house. Lending standards were never lower than they were in recent years. For Christ’s sake who is left to buy that can afford a home and wants a home? Anyone who buys now was going to buy anyway. Housing will not bottom until prices fall to affordable levels and political pandering from clowns like Sen Johnny Isakson stops.
Mike “Mish” Shedlock
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