One of the causes of the current housing bubble burst that no one seems to have noticed except for me is the reduction of the capital gains tax by George W. Bush. Investors are incented to flip houses as a means of fun and profit now that the capital gains tax is lower.
When houses are used as investments for those who want to buy, fix up, and sell instead of used as "homes" to live in by homeowners housing prices tend to drift upward. The quick rise in home prices makes it difficult for homeowners but more profitable for investors.
The problem is compounded when wages do not rise in direct proportion to the cost of housing.
My conclusion is let the investors go back to paying capital gains taxes on both long term and short term investments.
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