Propping Up Housing Prices

by Jeffrey Miron on December 29th, 2010
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Home prices fell in the nation’s major metropolitan areas from September to October, with six regions hitting new lows, and they’re not expected to rebound anytime soon.

The Standard & Poor’s/Case-Shiller index, long considered a reliable gauge of the housing market’s health, reported Tuesday that prices of single-family homes dropped 1.3 percent in all 20 regions it tracks.

The housing market’s collapse crippled the economy, and a recovery in home prices is considered critical to getting the market back on track. (emphasis added)

No, no, a thousand times no

Housing prices are falling because they soared to ridiculous levels during the bubble . Any policy that attempts to keep prices high – or, equivalently, that attempts to prevent foreclosures or juice housing construction — is fighting a crucial market adjustment to past distortions.

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  • Gerry

    In my opinion, although I wasn’t a fan of the program, I think the only way to “prop up” housing prices is to offer rebates to first time homebuyers. On that note, I think they need to make another incentive, maybe the lesser of “$15,000 or 10% of the purchase price” for first time home buyers.

    If they’re going to dole out bailout funds, might as well pay it out to responsible people as opposed to banksters or the poorest.


  • pat kofmehl

    A solution to the housing market is to change our emigration laws to encourage prosperous foreigners to come and settle in this country.

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