Your Lying Eyes

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19 December 2008

Another Housing Bubble Pump

Home purchases are typically financed by 30-year mortgages - a financing option seldom - if ever - available for any other kind of investment. Plus, mortgage interest - alone among all types of consumer interest payments - is a tax deduction. As if these incentives for home ownership weren't enough, capital gains on home sales are also exempt from taxation. Then, on top of all these incentives, the government - the Bush Whitehouse in particular - was pushing no-downpayment loans. In retrospect, how much more obvious could the housing bubble have been?

2 Comments:

Blogger Steve Sailer said...

Yes, but the 1997 law change had some good changes, such as removing the requirement that to avoid capital gains taxes you had to roll over into a more expensive house. I'm not sure what the net effect was of the various changes in 1997. It doesn't look like a smoking gun.

December 19, 2008 8:10 PM  
Anonymous Dano said...

The question becomes how low do prices go before people start buying.

Sales in Calif and Arizona are way up with people taking advantage of foreclosures.

Where can you get data to track that?

December 20, 2008 11:19 AM  

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