Help me understand. Is this idea just too simple to have been overlooked in all of our politicians' discussions about how to solve our real estate crisis?
The other day, I showed 10 homes to buyers between $45,000 and $65,000. There were 49 homes on the market available and of those, 41 of the 49 were distress sales -- short sales or foreclosures -- and every one of them was in distressed condition.
The truth is that there are not enough buyers of homes in that price range to absorb the inventory for several years. As we continue to dump distressed properties on the market, the values will continue to plummet.
But here's a simple solution. If you LIKE the idea, TELL YOUR CONGRESSPERSON ... FAST. Send it to your local Realtor Board with your letter of support and request they lobby for the idea with your state Realtor association and NAR. Send it to ALL OF YOUR DATABASE and ask them to send it to THEIR CONGRESSPERSON.
You want to get rid of the glut of foreclosure properties FAST and fix the real estate problem? It's simple. No government bailout, no throwing money at the problem. Simply eliminate the capital gains tax on investment properties purchased during the next three years. Can you imagine how much money would flow out of wealthy people's bank accounts to buy up the excessive supply of foreclosure homes?? They would be calling their real estate agents, saying, "I've only got $700,000 left in my investments after AIG destroyed me. I want to buy ten $45,000 dumps, fix them up, and sell them (or rent them) and when I sell (in 90 days or 10 years), I get to keep every nickel of profit.
Can you imagine how fast and furious real estate investors would rush into the market to take advantage of such a program?
And most of them will hire the work done. Plumbers go back to work, tile and carpet installers' phones ring again, new windows are needed, roofers have jobs, and so on and so on ...
Suddenly (within 12 months), the glut of homes forcing real estate values down is removed from the market by the private sector, not by the government, and the homes left on the market are those in marketable condition, not distressed condition.
While I'm at it, here is another crazy idea:
Reinstate consumers' ability to write off interest paid on credit cards, auto loans and second homes. Those interest write-offs were eliminated during an inflationary spiral to curb excessive spending. Today, we are in a recessionary (depressionary?) plunge now, and reinstating those tax credits might free up a bit of money for spending.