Historic Low Rates Cannot Solve The Problem

Maybe Washington is finally getting the idea. Ben Bernanke recently said, “Historic low rates cannot solve the problem” and “strong housing policies to help the housing market recover are needed to advance a tepid U.S. economy.”

Given the current lending environment, many potential buyers either cannot or will not commit to purchasing a home. There are also thousands of investors waiting on the sidelines with deep pockets of cash to invest. There are simply too way obstacles and economic concerns. 

Last year’s Federal Tax Credits spurred activity for a few months but it quickly tapered off as the deadline passed.  I heard a speaker this week calling for capital gains and rental income to be tax-free for 10 years to encourage investors to come into the market and help absorb the excess inventory.

This idea has real merit.  These investors do not need loans and have the resources to rehab properties so we get real cash into the economy. Further, there is a real need for quality rental properties. Rather than a tax credit that costs the taxpayers money, let’s eliminate or reduce taxes on rental income for a fixed period of time. This would encourage investing in income producing (rental) properties, increase the supply of rental properties, and reduce the inventory of properties on the market.

Housing can help lead the way out if we create an environment that encourages private sector investment.

REALTOR® Magazine-Daily News-Is Real Estate Jeopardizing Economic Recovery?

Analysts are blaming the housing sector for the slow economic recovery.

Analysts say the real estate market often leads to economic recoveries. However, “I expect housing will not provide as much support to this recovery has it has in previous ones,” says Eric Rosengren, the president of the Boston Federal Reserve Bank.

REALTOR® Magazine-Daily News-Is Real Estate Jeopardizing Economic Recovery?.

Source: REALTOR(R) Magazine Online