My theory on this is that the prices adjust to cancel out the benefit from the tax break. The out-of-pocket expense to the buyer is the same and the general tax

My theory on this is that the prices adjust to cancel out the benefit from the tax break. The out-of-pocket expense to the buyer is the same and the general taxpayer is subsidizing a higher price for sellers. It's a cash transfer from taxpayers to established landowners cunningly disguised as a legup for the middle class. I think the prices must adjust in this way since the supply of housing close to the supply of paid work is limited. If anyone can point me to a decent analysis of this, I'd be grateful. But this is my pet theory.