Re: Home Sales Plummet as Tax Credit Ends

A few days ago, I commented on the drastic drop in home sales following the end of the Homebuyers Tax Credit crutch and speculated that at least some of the money went to sellers in the form of higher prices than the market would otherwise bear.  To recap, a wealth transfer (or more accurately, a taxpayer debt transfer) to sellers in this form results in buyers who use the credit obtaining their homes at above market rates; immediately upon expiration of the credit, the home depreciates to its market value, leaving the buyer underwater.  Stephen Spruiell at NRO’s The Corner reports that, surprise!, this is exactly what is happening.

Published in: on June 29, 2010 at 11:07 am  Leave a Comment  

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