As foreclosures increase and housing sales and values continue to decline its time to ask ourselves, “Where’s The Beef”? So far we have had a tremendous amount of proposals and opinions from our Presidential candidates, plus we have a government that’s intent on applying band aids to a patient that many perceive is already on life support.
Currently it appears the attempts to forestall and delay foreclosures are not having any positive effect. The problem can be corrected, but the question is “Does our federal government really want to solve the housing crisis”?

The other day I was listening to radio talk show host Hugh Hewitt when he spoke of his proposal to allow individuals to use their 401K money to pay down their mortgage debt. He went on to mention that this proposal was under review by Rep Barney Frank. Unfortunately it seems that Mr. Frank’s current priority is the American Housing Rescue and Foreclosure Prevention Act, which in essence is just another government bailout, which will help many who have disregard for their own responsibility and doing what is right.

Mr. Hewitt’s proposal is very similar to a post I wrote including my own recommendations to pull ourselves out of this morass and allow homeowners the flexibility to use their existing retirement funds as necessary to resolve their own financial issues. That may seem like forward thinking to some and as a society we may not be ready to accept allowing individuals to manage their own money, money that they earned through each persons individual efforts.

Forget a Government Bailout

The only real reform that will produce positive change in the housing and real estate market is to provide incentives that encourage people to want to invest. Incentives that come through tax breaks. Tax breaks that encourage people to purchase, repair and fix up deteriorating property. Vacant homes reduce neighborhood values and encourage vandalism; home owners need incentives to invest money for improvements. Most of all we need tax breaks that reward people when they sell and make a profit. Risk must have its reward.

Solutions to the Housing Crisis

We must have real tax reform. We need Washington to get the message and provide the following benefits to home owners:

1. Penalty Free IRA & 401K Withdrawals - allow individuals to utilize their money to pay down debt or buy property. Allow us to invest in other avenues than an anemic, volatile equity market.
2. Loss Carry Forward - if a property owner has a loss on a property allow these loses to be deducted from the federal tax return. Currently if you lose money on your home, too bad. No deduction is allowed.

Housing Crisis One Year Anniversary

This has been developing for one year now. The situation has not improved at all. Its time to realize that we need some new policies to address a dire situation. Americans can be very resilient, they just need the opportunity. Otherwise we will be uttering line made famous by Ms. Peller in the Wendy’s commercial “I don’t think there’s anybody back there.”

Tags: housing market incentives, housing reform, jumpstart the housing market, tax reform