US Government Policy encourages next round of foreclosures!
Call me crazy but I thought that the sudden rise in single-family home mortgage foreclosures that began a year or so back was one of the main causes of the current financial crisis.
And that many of these foreclosures resulted from families over-extending themselves, taking on too much debt given 
their income and other financial obligations, in part because of incentive programs designed to reduce the upfront cost of the home and the monthly mortgage payments during the first several years of home ownership.
So why is Washington pushing to expand and extend the first-time home buyer tax credit?
According to the National Association of Realtors (NAR):
Bringing the Dream of Homeownership Within Reach
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.
Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.
But Calculated Risk blog thinks approximately 2 million first-time home buyers will take advantage of the credit by the end of 2009.
How many of these individuals would have waited to buy their first home until they were more financially secure, had more of a down payment saved, and were better able to weather the inevitable financial challenges that will come their way, without the incentive program?
Basic economics tells us one thing, if nothing else: when the price of a good is reduced, demand goes up.
These incentive programs reduce the price of home ownership to qualifying individuals, and demand goes up. Demand that would not have arisen at the higher price. We know this because this is exactly what the incentive programs are designed to do; encourage demand that would have otherwise not occurred.
Have we learned nothing from the latest failed experiment at social engineering?
By Sherry Jarrell
Learning from Dogs 