The Fed’s rapid rate hikes have created a huge penalty for selling a house. The result is an unnaturally low number of homes available for sale — a disaster for the millions of Americans currently looking to buy their first home (probably the single most important financial move of their lifetime).The federal government could help with a tax-credit solution, offering anyone with a new or recent mortgage (on the home they live in, not any investment property) a tax credit correlated with the extra interest they’re paying compared to the average interest for all homeowners. This would mitigate the selling penalty created by the Fed, helping restore the for-sale inventory to its more natural fundamentals.The cost of the tax credit would largely be offset by the higher rate the government earns on all the higher-rate mortgages (as the government ends up owning roughly 70% of all mortgages). And interest rates could stay higher across the economy, without the side effect of a selling penalty in the housing market
Image and article originally from seekingalpha.com. Read the original article here.