Ed Yardeni's Proposal for the Housing Market
By Arnold Kling
the Homestead Act that Carl Goldsmith and I proposed this past summer. It would provide a matching down payment subsidy of up to $20,000 for anyone purchasing a home as their principal residence for two million houses. It would provide tax-free rental income for 10 years to anyone who purchases a house to rent for another one million houses. That would eliminate the current overhang of unsold homes completely.
I am not sure about the mechanics of this, but the idea seems to be on the right track in terms of getting the housing market back to equilibrium. The problem is that it does not address the cosmic injustice of the fact that millions of people bought homes with little money down because they thought that prices always go up, and things did not turn out that way.