We are now more than three years into the housing recession/depression and there is STILL NO PLAN for recovery. Fed Chairman Ben Bernanke has done nothing to alleviate the market downturn which continues in full force:
Dec. 9 (Bloomberg) -- Fewer Americans signed contracts to buy previously owned homes in October as credit markets seized, signaling the housing slump will extend into a fourth year.
The drop in prices has attracted some buyers . . . [but] banks, resisting Treasury and Federal Reserve efforts to unleash lending, have been reluctant to write mortgages as record foreclosures drive down property values and widen losses.
"The fundamentals of housing remain quite depressed," Dana Saporta, an economist at Dresdner Kleinwort in New York, said before the report. "Credit constraints are a major hurdle. There’s a huge inventory, so prices will come down further."
Why doesn't President-elect Obama propose a tax plan to clear right now the inventory of houses on the market so that house values stop falling and banks start lending to buyers?
Instead of public works projects to rehab schools, re-pave roads and build bridges to dubious locations, a new income tax deduction for the purchase of houses could spur the market and reverse the recession. The solution to foreclosures is rising prices so that the houses can be sold.
UPDATE:
From the CalculatedRisk blog
In a research note titled "Foreclosure Update: over 8 million foreclosures expected" (no link, hat tip Frank) updated last week, Credit Suisse analysts are now forecasting 8.1 million homes will be in foreclosure by the end of 2012, representing 16% of all households with mortgages.
Note: the Comptroller of the Currency John C. Dugan noted this morning that re-defaults rates [for previously modified mortgages]appear to be well in excess of 50% for recent mods, much higher than the hoped for 40%.
So the housing market is ACTUALLY GETTING WORSE! Where is the "temporary, targeted" stimulus that Pres. Obama promised?