Government bailouts?
Sure, give money to the poor or middle class who bought homes they can no longer afford. Give money to the rich, to stimulate the economy. Give money to the banks, to help them stay solvent.
Or, give money to the 5 million homeowners who have their properties on the market …
Um, what?
From today’s Journal:
How to Fix The Housing Crisis – By Irwin Kellner, MarketWatch, by way of The Wall Street Journal
… Home prices are falling because there are at least 5 million unsold homes overhanging the market … Their median price is $208,000. That’s 10% below the peak, but still a high 3.2 times median family income.
Housing would be more affordable if the median home cost 2.8 times median family incomes … a drop to $184,000.
Simple arithmetic tells us that this is a difference of $24,000, or about 12%.
If the government were to give sellers half of this, they would be able to lower their asking prices without losing any more money. And giving buyers the other half would enable them to pay more without having to come up with additional funds.
Make this offer good for a limited time only (say, six months) and the economy would get a jolt where it needs it the most. And the cost would be only $120 billion ($24,000 times 5 million unsold homes).
Well, I see absolutely no problem with this idea, at all.
Let’s do a “Manhattan Project” on it!
(** Alright, points to you if you already saw another solution to this problem … a really really REALLY good solution … let’s just give the money to real estate agents, if they agree not to take any commission on the deal. I mean, be serious – you give the money to a buyer or seller, he or she is only going to turn around and pour that money into another home; give it to a real estate agent, and you increase BMW sales (Hybrids, in my case), casino gambling, and polyester suit sales.)
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