Wednesday, July 28, 2010

What effect did the homebuyer's tax credit have?

Not much, according to Casey Mulligan in the New York Times.  He argues that the value of the housing stock, $14 trillion, overwhelms the value of tax credits claimed, $19 billion, so the effect on total pricing is negligible.  Although the credit may have accelerated some transactions and building projects, it did not create them out of thin air.

So what are we to  make of the  unexpected collapse in the housing market since the credit expired?
Posted by Jim Gust at 7:59 AM

1 comment:

JLM said...

You already answered your own question: there's strong anecdotal evidence that the credit accelerated many transactions.

Latest figures suggest the subsequent "crash" may turn out to have been the predictable sequel – a brief deceleration.

Bottom line: People who need houses and can afford them will buy, but people who used to think they could 'flip" houses for quick profit won't be back in the market for quite a while.

9:36 AM

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