06.19.09

Inflatable House

Posted in Politics at 9:16 am by justakim

I was speaking to a friend in Australia who had been house hunting for months and suddenly she wasn’t anymore. I asked her what happened.

It turns out that her government was giving out a first-time home owner incentive and that she was going to use it to buy an apartment. But the incentive was set to expire sooner than most applications could get through the pipe so this incentive was increased and extended ‘indefinitely’.

This caused the real estate market to respond by raising prices, negating the benefits of the incentive because a significant number of home buyers would have exactly that much more money available to buy a house with. Gotta check that elasticity before setting up those incentives.

I’m sure we wouldn’t mind a misguided housing price bump around here.

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