Senate votes to re-inflate the housing bubble

The Senate has approved an addition to the economic stimulus package that would give a $15,000 tax credit to anyone who buys a home within two years of the bill’s passage. The credit only applies to a principal residence, and would have to be repaid if the buyer sells the home within two years..

On the one hand, a bill that makes it easier for people to afford homes is a great idea. On the other hand, giving home buyers more money to buy a home means home sellers can keep prices artificially higher. I am not sure a continuation of artificially-inflated home values is what the economy needs right now.

Unlike Dean Baker’s alarmist comments at The Huffington Post suggest, the amendment to the stimulus package does not seem like it will ignite a flipping frenzy, but it does seem like it will cost far more than Senator Isakson’s (R-Ga.) estimate of $19 billion.

Senators Go Wild!, Approve House Flipping Subsidy, Media Doesn’t Notice | The Huffington Post (thanks to MajorKong for the clever title)
Isakson amendment gives $15K tax credit to homebuyers | Atlanta Business Chronicle

(photo: Wikimedia Commons)

(thanks, Darielle!)