RJMoran

Help the Housing Market with a Buyback Program

One of the 'unintended consequences' of such a 'buyback', I'm afraid, would be that builders would have NO incentive to stop building. They could keep building, knowing the gov. would eventually step in and buy their deteriorating 'product'.
While I sympathize with the idea of gov. help, we already have the gov. bailing instituions out left and right for failed business decisions they made quite willingly...Having the gov. be a 'buyer' of real estate only delays the inevitable. If renting the oversupply would help, private owners and developers would already be doing it (and are in the case of condo towers laying empty). Cheap money led to a misallocation of resources toward overbuilding/building material price increases, etc and that 'condition' will just have to correct itself over time with lower prices and perhaps government-assisted incentives to get potential buyers 'off the fence' and into buying up some of the overhang.
Even after prices stabilize, they will not go up for years since at every price increase, people will look to sell, attempting to 'sell the rally' like they do in equities. Unfortunately, we're in this for some time...! In the 90s when Southern California real estate dropped 30-40%, it took nearly a decade to recover the prices seen at the then peak...Settle in folks, this is going to take awhile and there will, unfortunately be no SNAPBACK rally in real estate...