Dean Baker says it best, if you ask me once I found out that the $15K credit was not only open to first-time buyers, but all home buyers:
Still, many critics doubt that the credit will have as deep of an impact as Yun and Howard predict – and some have been scathing in their critiques. “This is the biggest, most hare-brained scheme,” said Dean Baker, the co-director of the Center for Economic and Policy Research. “If this passes, I’ll be amazed.”
One major objection is that the credit is available to existing homeowners, who would essentially be selling house A to buy house B and thus have no stimulus impact on the economy. Baker called it a “house-flipping subsidy.”
Plus, he added, it gives a credit to others who would buy anyway.
“I actually like this bill,” Baker said sarcastically, “because, with home prices in Washington plummeting, I’m considering buying a house.”
He also raised the possibility that it could be gamed: What’s to prevent two people from selling their houses to each other, in name only, just to claim the $15,000 each?
Dean Baker is right: this is a gimme for real estate agents who earn a commission for each and every sale. It promotes flipping (and adding as much inventory as it gets rid of). There is no incentive for a first-time homebuyer that will actually reduce the inventory, since as soon as the stimulus is gone, prices will fall to reflect the new reality (likely at least $15K).
This is proof positive that the only proper action is to let home prices fall to their market-clearing price. Any attempt to influence when that happens extends the recovery. Sad, really sad day for American taxpayers.