Will Terrible Housing Data Dispel The Notion That Tax Rebates Are Effective?
Sales of new homes plummeted in May following the ending of the tax credit for homebuyers. This drop is much, much worse than our stupid analysts projected. Not surprising. The May numbers were the lowest on record since 1963.
So, if you’ve been following me here at 20smoney, you know I’m not surprised by this. In fact, I have been saying this would happen all along. The question remains whether the general public and the political elites will see these results and end government intervention to “fix” the economy or housing.
My guess to this question is no. Politicians want to look like they are working to fix the economy even if nothing they can do will have any real lasting impact. As such, look for more rebates and stimulus in the future (after mid-term elections) for another round of “fixing” our economy. What’s next? A $20,000 rebate for anyone who is willing to pony up and buy a home? $50,000? It won’t matter. There is no fix.
My XHB short should do well this summer.