I always thought government’s role was to encourage and increase home ownership due to the benefits derived. When individuals can own their own home the community benefits with safer neighborhoods, appreciating home values and the creation of wealth. We see increased parental involvement in the local schools. Our homes represent who we are and what we aspire to. Home ownership has always had a financial benefit associated with it. Remove the incentive and what happens. My guess is demand will fall.

Use interest rates as an example. When rates are low the housing dollar goes further, therby creating more value. When rates rise, demand falls as housing becomes more expensive. Could the same happen by removing the stimulus, which home buyers have relied on for years and have used to rationalize a more expensive home purchase? A robust housing market creates jobs while the economy prospers as appliances along with home furnishings rise as well, fueling the economic cycle.

Removing the financial incentive on housing and taxing the banks that make loans will not create a job. This is especially critical here in California with the housing market making a comeback. Penalize housing, penalize California, as if we needed another hurdle to jump. Consumer purchases create optimism, get business hiring and gets the economy going. You don’t tax your way to prosperity.

The only bright spot I can see at this point is the tremendous power of the National Association of Realtors along with the California Association of Realtors. They have been incredibly successful in putting a stop to bad economic policy affecting the housing market. Probably because they more than anyone else, realize that home ownership is the centerpiece of the American Dream!