Tax Credits vs. Low Rates

The Right Stimulus for Housing

There now seems to be a clear consensus that, to help the economy, government must first do something to help housing. However, there's still no consensus about what.

The two leading strategies are:

One. Using taxpayer money to basically subsidize mortgage rates down to some previously unheard of number, like 4% or even lower.

Two. Using tax incentives to motivate prospective home Buyers. There are various proposals being floated, but the basic idea is to give Buyers up to a $15,000 tax credit.

The debate isn't just over what will stimulate housing the most for the least cost, but which strategy will help housing the most long-term (or perhaps, hurt it least).

In that vein, some critics of the "cheap money" approach are concerned that that will just set up housing for another fall down the road. It's one thing to qualify for a mortgage, they point out, but completely another to be able to afford that mortgage if home prices drop and/or the economy contracts.

Lenders in Florida, Southern California, Las Vegas, Arizona and many other locales can you tell you all about that . . .