Without additional supply, you might succeed at dampening demand and temporarily decreasing prices - most US homebuyers are shopping a payment similar to rent (

Without additional supply, you might succeed at dampening demand and temporarily decreasing prices - most US homebuyers are shopping a payment similar to rent (and accounting for their downpayment amount). However for places that have more desirable properties (employment, weather, etc), all else being equal, you will still get an influx of people over the less desirable and will still be in a supply shortage. Bay Area in particular you have a crazy imbalance that basically absorbed the high salaries of those working there. For many, the issue could be fairly easily solved with some additional height and/or townhome density. It’s happening slowly. The pandemic has created other dynamics though, so who knows. EDIT: just a closing thought on the policy side, you are basically making affordability problem worse by reducing incentives. Those already in the real estate market/ownership will be fine, but price of entry will be a lot higher.