The freedom to say that two plus two make four.

From the BBC:

US house prices began falling again in August after the expiry of homebuyers' tax credits, a survey suggests. Prices were down 0.3% versus the previous month, on a seasonally-adjusted basis, according to the Case-Shiller index of 20 major US cities...

A tax credit for homebuyers expired in April, leading to a steep drop in home sales over the summer. That same effect now appears to be feeding into house price data, which are published with a two-month lag.

Fair enough.

1. That Homebuyer's Tax Credit was [up to] $8,000 for first time home buyers and $5,000 for repeat home buyers, a sort of negative Stamp Duty Land Tax. I've no idea how long 'chains' are in the USA, but let's call it three, so for each transaction, the total amount of the credit would be [up] to $18,000. Let's also not forget that the two nationalised lenders "own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion", and IIRC are responsible for about 80% of new lending.

2. It's quite reasonable to expect all these direct or indirect subsidies to lead to an increase in the number of buyers and movers, and thus the number of transactions and, most importantly, the prices paid, and most articles I've seen seem to take this as a given.

3. So would it not be fair to say that the value of these subsidies accrues mainly to people who are selling housing, rather than 'helping first time buyers onto the property ladder'? (Cue Dearieme's quote). What the first time buyer gains on the subsidy swing he loses on the price roundabout.

4. If that is true (which it is), is it not also fair to say that withdrawing all these subsidies would actually help first time buyers: prices would fall by the value of the subsidies, but on the other hand, they would have a smaller mortgage to pay off and a slightly lower income tax burden in future (all those subsidies have to be paid for, and the higher government debt will have to be paid off sooner or later)?

5. Once we've gone that far, is there any reason to assume that continually reducing the subsidies until they were negative, i.e. a tax on home ownership, would not affect first time buyers either, and in a subtle way, make them better off in future?

Just askin'.