Brad King, LPL Financial Advisor, sent in this thoughful comment on a recent story. He raises a good point about how legislation designed to pump up the real estate market may have done the job too well.

Mr. Gersh,
I enjoyed your segment about the Pittsburgh PA real estate market shown on NBR on Friday evening, 4/18, here in Oregon. Over the last year, all the stories seem to avoid the part of the crumbling residential housing market that I think should have some light shined on it. The Taxpayer Relief Act of 1997 changed the rules of the taxation of capital gains on residential real estate that is not being covered at all. It has been my experience in talking to my clients, and prospective clients, that many of them are well aware, and in some cases taken advantage of, the huge tax free capital gain the tax law change provided. The real estate industry developed products to assist those who wanted to engage in the “two year primary residence rule” and sell. The tax law eliminated the 55 year old age limit for one time capital gain exemption that was in place and opened the housing speculation game to all comers. Congress hasn’t owned up to its part in this problem, and will not admit its role without the media focusing on it. I suppose it could backfire. If Congress does admit it played a role in the housing problem, they would then be even more motivated to come up with an expensive “fix” to pay for their mistake. Then we all get to pay!