There are now dozens of programs out there to keep home prices as high as possible. Price is just a function of supply and demand. All the loan modification programs for existing owners keep homes off the market, reducing the supply of homes. All the programs to keep cheap easy money flowing into the housing market (FHA, Fannie, Fed purchases of GSE MBSs, low interest rates, even govt props for private mortgage insurers) boost demand. Over 90% of all money going into the housing market is cheap and easy govt money.

The home tax credit was just icing on this layer cake of price supports. When will the cake collapse? Probably never. I wouldn’t buy when the icing is on the cake, but I wouldn’t obsess over the icing. The collective impact of all the other price supports is much larger.