Economic Recovery Depends on the Real Estate Market

By John Sauro

 

Nov. 2, 2009

 

     The Obama administration has said the economy will go by the way of the US real estate market. So why has the administration done nothing to help the real estate market?  Oh yes, they do have the $8,000 tax credit.  Get real!  The crisis our country has been dealing with is one of fear and psychology.

 

      I proposed, back in the beginning of 2009 that the US government guarantees the value of US real estate. After all, it is the most valuable real estate in the world.  Therefore, if the value of an individual’s primary home drops in value, they could write it off on their income tax.  This would instantaneously help the real estate market to recover. Why? Because no one wants to catch a falling knife and as long as people perceive the real estate market to be dropping, they will not buy.

 

     If the government were to guarantee the value of real estate with an allowed tax write off.  The odds of the government actually having to actually honor those write offs are slim to none because once such a plan is announced, the fear that has gripped the many would be homebuyers of falling values would evaporate overnight.  People will jump back into the market and real estate market values would stabilize almost immediately.  Additionally, there is nothing more stimulating to the economy than a tax cut.

 

     Even if some write offs were filed, it would be dim in comparison to the money allowed for the TARP programs and would serve the people and the economy much better. Such a plan addresses the psychology of the current environment, will save a falling real estate market and have a very powerful and stimulating effect on the economy.