Apparently the real estate industry is pushing for a $7500 homebuyers’ tax credit. This is, as Andrew Jakabovics points out, a pretty dumb idea. Meanwhile, I just saw on TV a representative from the homebuilders’ lobby looking for his own share of the stimulus pie. Again, dumb idea.
What you’re looking to do with stimulus is employ idle resources on creating something that will be of use to someone. But the whole reason real estate prices have been plummeting has nothing to do with an absence of tax cuts, and everything to do with the fact that we’ve built too many buildings. There are only so many people in the United States and thus there are only so many dwellings that can be occupied. The collapse of the construction industry is creating a lot of unemployment and so it’s desirable, insofar as possible, to focus stimulus on areas likely to employ idle building trades workers. But there’s no sense building more homes or doing anything designed to resuscitate the construction boom.
It’s all sort of too bad since as an urbanist—and as a guy who lives in a neighborhood full of brand-new construction and vacant lots—there are plenty of construction projects I’d like to see undertaken. But realistically, it’s just hard to see much new construction being viable for several years even if we’re optimistic about the general state of the economy.