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Your argument is suggesting that there are enough people in the market using their tax deductions as a strategy for paying their mortgages. I'd argue that if yo
by alttab 11y ago
Your argument is suggesting that there are enough people in the market using their tax deductions as a strategy for paying their mortgages. I'd argue that if you are that close to not being able to afford your mortgage, you won't make it past underwriting. Even if you did, the volume wouldn't be such that it demands significantly higher sale prices. And even if it did - it would pale in comparison to China-fueled cash-in-hand sales and zero interest rate policy, which is driving all markets.
A quick google search doesn't produce results that suggest that removing the deduction would reduce housing prices to the point that people in this thread are saying. Here is just one example that states it would reduce prices by 0.3%: http://www.taxpolicycenter.org/taxvox/what-changes-mortgage-deduction-would-mean-home-prices http://www.taxpolicycenter.org/taxvox/what-changes-mortgage-...
- sokoloff 11y agoYou read that wrong I think. It says that limiting itemized deductions to a marginal rate of 28% (an Obama proposal that was DoA) would cause housing prices to fall by 0.3%. Reading two sentences further from that same article you linked: "completely eliminating the mortgage interest and property tax deduction—a drastic change that probably would only happen if accompanied by a new tax preference for housing—would cause housing prices to fall by an average of 11.8 percent in the 23 cities studied. Estimated price declines would range from 10.3 percent in Seattle to 13.8 percent in Milwaukee." I'm not using the tax deduction as a "strategy for paying my mortgage". I did figure the savings from the tax deduction in modeling my budget, the effective cost of housing, all of which influenced my bid(s).