A Second Economic Stimulus Package????

This is a really interesting article from RealTrends.com regarding the possibility of a home buyer tax credit to reduce sales inventory and help spur the economy.

Homebuyer tax credit a possible way to reduce inventory

The idea of a second economic stimulus package is getting attention in Washington these days, and this one could have a provision to help more homebuyers. One proposal is to include a tax credit for buyers - a move that could help reduce the large amount of housing inventory currently on the market. A similar plan was put in place to clear out inventory in the 1970s, according to the National Association of Home Builders.

Help for first-time buyers is particularly important, said Lawrence Yun, chief economist for the National Association of REALTORS. More first-time buyers create a chain reaction in the market, allowing more current homeowners to trade up into their next home, he said. A tax credit for first-time buyers could give them a boost in confidence, counteracting their worries of home-price drops to come, he said.

"People will realize that the worst in housing is coming to an end if they see bold measures," Yun said in a telephone interview.

Can legislation actually work to reduce inventory? It has before, according to the NAHB. The group said that in 1975 - another time when inventories were high - a $6,000 home-buyer credit brought in a substantial flock of buyers, enough for builders to get back to business. (MarketWatch)