If you have a GMAIL account or are a ready of Business Week, you might have found an article about subsidies.

The article talks about subsidies and how they play a role in moving real estate.  It gives the impression that there may be a false ceiling (or bottom depending on how you look at it).  It does not speak directly about numbers or what is being offerred.  Furthermore, it almost suggest that Realtors are the ones pushing this movement.

I can only speak about my experience here in Atlanta, but a typical offer will look like this:

Asking Price: $200,000

Agreed Price $198,000
Seller Pays $4000 in closing
Seller leaves refrigerator or pays $1,000 decorating allowance.

For the purpose of the article, I would consider $1,000 to be a subsidy.  Lenders are getting very tough on this sort of thing.  Heaven forbid you find a home that needs a lot of work, decorating allowances are all but gone.

Each state has a differing view on Closing Costs.  It seems like this article mistakes the seller paid closing costs (the norm in Atlanta) for a subsidy.  Its been my experience in states like New York, they will negotiate the price and tack on closing costs if needed, whereas in Georgia, we negotiate with them as an option included already. 

As for Realtor practices skewing data, it would only take a surveyor to find out this is false as well.  Ask any Realtor what the standard discount on a home is and they likely have an average for the area.

The article is interesting because it's writer is obviously someone who doesn't understand that Real Estate is a market like the stock, commodity or currency market.  Prices go up and down, each market has commissions, incentives and a variety of purchasing options. 

Ooops, I think I rambled too much.