Let’s assume it is really a $25K payout called a tax credit.

Posted on: August 31, 2024 at 08:57:33 CT

In a tight market, since people aren’t moving as much due to having abnormally low interest rate loans, that $25K has increased demand as more would be able to afford. But the response then is starter homes have just gone up in value because first time buyers all are bringing an extra $25K to the offer.

Now the owner of the starter home may see that extra equity in the starter home they own and decide it is now palatable to move into a more expensive home despite the interest rates being higher. So the demand for the next tier of homes gets nudged up, increasing prices there.

So in the short term we end up right back to where we are at now with housing just even more expensive, yet the government having also increased the national debt.