[quote=kev374]my guess is that it will not have any effect on home prices since the amount any buyer can offer is still driven by 2 things:
1) Income
2) Availability of credit (which now is driven strictly by income)
as long as income does not inflate, home prices will continue to fall until it matches historical affordability. However, with all this massive amounts of money being injected into the market by the government I am not sure when the current wave of deflation is going to turn into inflation, this part is not clear.[/quote]
Actually, availability of credit is NOT driven strictly by income. It is also driven by the ability and willingness of the lender to lend. This depends heavily on the lenders’ balance sheets, which is what the plan intends to address.
