(Source: Business Week)

The U.S. government has been helping to prop up the housing sales by keeping interest rates artificially low and by offering $8,000 to renters who purchase homes. A new report by Capital Economics in Toronto suggests that the government has succeeded in giving a needed boost to the market, but the recovery would likely continue with or without the incentives. (The deadline for first-time buyers to take advantage of the $8,000 tax credit is fast approaching. To get the credit, buyers must close by Nov. 30. The National Association of Realtors and the National Association of Home Builders, which say the housing market is doomed without the incentive, are lobbying Congress to extend the credit and expand it to include all buyers).

The “government’s initiatives have kick-started the housing market, but they do not explain all of the recovery,” Paul Dales, U.S. Economist at Capital Economics wrote in an Oct. 6 paper. “… the housing recovery is not going to come to a complete halt if the government incentives are not extended.”

Read Prashant Gopal’s full article “Is the Housing Recovery Real?” in Business Week (October 6, 2009).

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