Housing prices: Stabilize the market or let them fall?

Andrew wrote:

The problem with stabilizing housing prices is that they are too high. If we try to keep them where they are, then average people will not be able to afford to buy a house. It is unfortunate that many people bought during the bubble (or to put it another way, caused the bubble by buying at such inflated prices). But there is no way to keep prices up. And to try, especially by using public tax dollars as we have been doing, is grossly unjust to all who stayed renters, saved their money, and want to buy a reasonably priced house with 20% down." MORE

Anonymous found the proposal puzzling:

If you guarantee the price of the house to the seller, who decides what price it will sell for? MORE

Peter T though the proposal was a waste of money:

The housing bubble that brought us 100% appreciation within a few years had to burst – as bubbles always do. It is simpe a waste of money to try to keep a bubble inflated when all potential buyers can see the foolishness of overpaying for the asset now, may the asset be stocks, houses, or tulip bulbs. To spend any penny of taxpayers’s money on keeping the housing bubble inflated is equally foolish. Not that I am surprised that we have many fools in office, I just hope that they loose not too much of our money with their stupidity.