4 million existing homes on the market … so what?

There’s a lot of hand-wringing going on over the fact that there are about double the number of existing homes on the market now versus historical averages.  And, there 4 million number is probably low since some people would like to sell but aren’t listing their homes because of the bad market.

But, put the number in perspective.  The 4 million homes represent only about 3% of total households and about 5% of owner-occupied households. That means that for 95% of home owners, the number is largely irrelevant.  They’re paying their mortgages and taxes, and they aren’t planning on selling to move.  Sure, house prices are down, but — unless they have  home equity loans  — the only short-term impact is simply “on paper”.  These folks will be fine until the housing market rebounds … and it eventually will !

My suggested remedy to the problem: (1) set a zero capital gains tax rate on houses bought in 2009 and 2010 as long as they’re held at least 2 years, and (2) allow landlord-investor’s who buy residential homes in 2009 and 2010 to accelerate depreciation and offset ordinary income with all rental losses.  The 2 million “overhang” in houses would be cleared in weeks, and folks who can’t afford to buy houses would have more rental choices,

[Buyers' strike]

Source: WSJ, 01-02-09

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