Critics of the proposed $15,000 housing allowance amendment to the economic stimulus bill say it wonâ€™t work.
The Senate version of the proposal would give $15,000 (or 10 percent of the purchase price, whichever is lower) to every buyer of a house in 2009.
The idea is to bring more buyers to the market, but some suggest that this wonâ€™t happen if people are worried about losing their jobs or if they are concerned that the value of the property will decline.
Rajeev Dhawan, director of Georgia State University’s Robinson College of Business, argues that the plan is an insignificant amount in the high-end market and at the lower end, it wonâ€™t help those who canâ€™t afford to buy a home because they canâ€™t get a loan.
“How are those at the lower end [of the market] going to get financing?” asks Dhawan. “The banks aren’t lending.”
Other critics say the plan will cost too much â€“ an estimated $75 billion if 5 million homes are sold.
Dean Baker, co-founder of the Center for Economic & Policy Research, a Washington think thank, says those homes would have been sold anyway. “It seems a total waste of government money for no reason,” said Baker.
Source: BusinessWeek.com, Moira Herbst (02/06/2009)
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