Economist and Similar Prognosticators Don’t Know Much About Selling or Owning Real Estate

How much of an effect will the elimination or partial elimination of our current interest deduction have on real estate values going forward?

It looks like the national increase in real estate values is around 6%. How much of an effect will the elimination or partial elimination of our current interest deduction have on real estate values going forward?

A couple of months ago, I was doing a refinance for a couple. I was reducing their remaining 26 year mortgage into a 15 year mortgage. The topic of interest deduction came up and the wife made the following statement: “If the interest deduction goes away, out home goes on the market.” This middle America family may be making that choice, as may many others, who just don’t see the benefit of owning.

I wonder how many of these economist own or rent? Their opinion may depend on that belief.

Economists Divided Over Impact of Any Change to Mortgage Interest Deduction

By: Amilda Dymi

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Anne Miller December 29, 2012 at 04:35 PM
It is very important that all homeowners or would be homeowners talk to their congressmen and tell them if they eliminate the interest deduction this coming year the problems we will have with more short sales and foreclosurers. This is not the time to hit the buyers and sellers today when so many of them have just walked away from their homes because they cannot affort the mortgage. ...even with the tax deduction in place. I do hope the people we have elected will look at & curb their spending, I hope they will do so ...so we will not have increases in all our taxes. I know that is hard to do but there are too many people taking advantage of our systems, and too many people without jobs, and many of those working supporting those that could work,.but need jobs. I don't have a magic wand, just a hope and a prayer.
Joel Mrosek January 01, 2013 at 01:19 AM
I can't imagine this deduction ever being abolished. In one stroke, 30% of total value in single family and multifamily homes would vanish. No lawmaker would be that foolish. That would result in about $250 billion of family wealth and "savings" evaporating. Real estate prices would fall. I have heard this trial balloon floated for a couple of years. It would be economic insanity to implement it now. We have witnessed historic levels of political and economic foolishness the past four years, but even I remain optimistic that no one would promote something this dangerous.


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