Getting rid of the mortgage interest rate deduction would only further depress home prices.

[coti]

And cause more huge problems.

Not to mention that it's another way of increasing the middle class' tax burden as compared to the rich.

Bad idea.

[eilen]

1. What's wrong with that?

It's called a correction.

Houses are too expensive. The jobs that can support mortgages over $100,000 are disappearing. Anyway, with the market flooded with foreclosures, I hardly think the rate reduction will make a dent. We all need shelter.

[coti]

3. Because our middle-class economy is based in home equity.

This would cause even more homes to go underwater, more foreclosures, more bailouts and maybe another near-depression. More lost jobs, etc., down the line.

It's pretty much causing what happened in the summer of 2008 to happen all over again, but on purpose.


The problem is this move hits in the wrong spot. It weakens the middle-class, not the speculator class.

[JuniperLea]

2. That's how I see it too...

Plus, if people don't have incentive to buy and hopefully pay off before they retire, they are way screwed. Rents go up, and we have no idea how much, so you can't really plan your finances long term when you plan to rent all your life. Even if the home isn't paid off, at least the mortgage payment was negotiated long before you retired and will no doubt be a lot lower than the then current rent rates.

People just don't look at the big picture.

[Warpy]

4. It's a typically stupid idea, floated by timid and venal men

who are desperately trying to avoid any burden on their rich patrons.

Obviously, what needs to be done is replacing the progressive income tax. It's the only way to fund our government and make it work for all of us, not just the few. While the few have been sucking money away from it, not only have social programs been gutted, but so has our infrastructure.

Screw the rich. It's time to STEAL IT BACK.

[JuniperLea]

7. Yes...

You can't just nibble away at individual taxes; there's no way to be fair that way... the entire system needs overhauled.

[Swede Atlanta]

5. Should never have been deductible.....

Those that can afford (oh yes there are those that simply don't save the 20% for a downpayment)a downpayment and purchase a home are subsidized through these tax deductions by those that can't afford it.

This has been a boon for residential real estate for years. Because the "owner" can deduct the interest, this fuels home sales. But at whose expense? It is at the expense of those that cannot afford to purchase a home.

So, historically, the home purchaser gets not only their equity but their interest is deductible. I'm not suggesting that home ownership is not a legitimate policy objective but this is done on the backs of other taxpayers.

[PurityOfEssence]

28. You don't have a problem with my paying property taxes, though, do you?

By increasing the number of people able to get a mortgage, it increases the values of houses and the amount of money collected in taxes. Here in Los Angeles, we regularly get nibbled away at by specific levies, and we're supporting the county government.

Like it or not, it's been a very broad and accepted mechanism by which many of us plan our futures, and to radically eliminate it, especially in markets where housing is so very pricey, will be ruinous for many.

There's a sickness among conservatives that relishes the failure of others, but it exists in lefty circles too as the vengeance of the downtrodden. Suddenly removing this from the tax code would be tantamount to financial destruction for many who are locked into 30-year notes.

[dkf]

6. Housing is unaffordable and needs to come down.

We are seeing such a problem with foreclosures exactly because housing is too expensive.

Homeowners are simply going to have to take the hit and hope inflation will increase their salaries over time.

[Hannah Bell]

9. fuck that noise.

[dkf]

11. If it was at affordable levels people would be snapping up properties.

[Hannah Bell]

12. fuck that noise.

"Homeowners are simply going to have to take the hit and hope inflation will increase their salaries over time."

[dkf]

23. That is what Hawaii did in the 80's after the Japanese created a real estate bubble.

Everyone who bought during those years was in this situation for a decade. One of my friends bought a two bedroom condo for $160,000. It went all the way down to $60,000. 15 years later he sold it at a break even price.

My other friend, an engineer, had a loan officer advise him to walk away because his townhouse was underwater and was a two hour drive from work. That was the first time I had heard of walking away. He still has the property and is renting it out.

My other friend couldn't buy her land lease on her townhouse because her original property was underwater so she couldn't get a second mortgage to pay for the fee.

My co worker was underwater for 10 years and she bought her place with an interest rate of 8%. Now, she has a minimum $250,000 profit should she decide to sell.

Now every single one of these people survived through the crash without defaulting or walking away and all have properties worth more than they bought it for.

It takes time...but they all made it. Granted they didn't lose their jobs and that is probably the biggest factor, but being unemployed makes pretty much any home unaffordable.

[sally cat]

15. How will this make it come down?

[dkf]

25. Paying less taxes enables more funds that can pay a mortgage payment.

Then you can afford more house.

If there is no mortgage deduction, you may more taxes and have less take home pay for a mortgage. Then you can't afford the bigger house.

[Mosby]

16. there has already been a massive correction

You can buy a forclosure home in the phx metro area for 60-70k and afaik there are a lot of home sales but the inventory is so huge the prices keep falling.
Many forclosures happened because people bought houses they could not afford, especially the "flippers".

[dkf]

26. I was looking at a one bedroom condo today in Honolulu. $265,000 with a $501 maintenance fee.

Sigh.

The building was part of an elderly affordable housing project so it's nothing special.

[Nye Bevan]

8. There's no mortgage interest deduction in the UK

And house prices there are doing much better (from a seller's POV) than in the US.

[Hannah Bell]

10. average home price for a detached home in uk = L328,778.

http://webcache.googleusercontent.com/search?q=cache:CqZ_swISSWYJ:www.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm+median+home+price+uk&cd=1&hl=en&ct=clnk&gl=us

in 2008, median home price was 6.27 times the median wage in the uk.

http://webcache.googleusercontent.com/search?q=cache:45uO7dx1tcIJ:www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/housingmarket/livetables/+%22median+house+price%22+uk&cd=1&hl=en&ct=clnk&gl=us

[HuckleB]

22. That's because land costs much more in the UK.

[taught_me_patience]

13. Mortgage interest rate deduction is regressive

because renters get nothing... yet they typically have lower incomes. DUers seem to be against regressive taxes when it hurts them (sales taxes, gas taxes, etc), yet support regressive policies when it favors them.

[slackmaster]

17. People who own their homes outright get no mortgage interest deduction either

Yet they still have to pay for upkeep, repairs, and property tax.

Everybody is generally supportive of policies that favor them.

[sally cat]

14. Lower home prices? Ask a home builder if this would reduce the price of his homes.

[KansasVoter]

18. Yes, I am sure that never occurred to them. Jesus!

[pa28]

19. Eliminating mortgage interest and child deductions will effectively be a large tax increase.

Many of those already struggling are close enough to the edge the income erosion cliff to be pushed off by an extra 2 or 3k on their annual tax bill.

The revenue Simpson wants to scoop out of the public carcass will finance a massive tax cut for top bracket earners, not deficit reduction. Simpson's whole plan reeks of redistribution and open warfare on the remaining members of the middle class and they won't forget.

Republicans are hoping to take a trip to Conservative Disneyland and blame us. You know what? If we make the mistake of going on they'll be right.

[coti]

20. Yes, a good portion of homeowners couldn't afford the income difference by itself,

notwithstanding the decrease in their home value.

[HuckleB]

21. Maybe. Maybe not.

If it was done all at once, it would certainly cause problems for any families that are just hanging on to their homes by barely paying the mortgage now.

Any change would have to mean a cap on the deduction, with some sort of grandfather clause for those who couldn't stay in homes if the deduction is suddenly gone. Or, yes, the economy would face another big hit, and everyone would pay for that.

[Curmudgeoness]

24. I have always heard this argument, and I have never

believed it. I have never known anyone who buys a house for the interest deduction. They buy a house for the American dream, because they can now afford it, they want a house, they are sick of paying rent and having nothing for it...lots of reasons. But not just for a deduction. They will continue to buy houses because this is one of those steps toward "success" in this country. This is just another of the lies that we are told. You know how it goes---"trust me, I know better than you do".

[Greyhound]

27. While it is a bad idea (what else would one expect from these assholes but a bad idea?),

depressing home prices would be helpful.

Now initially you might say "depressing home prices is terrible", but the housing crisis is, in large part, the result of a fundamental disconnect between loan to valuations and average U.S. salaries. The housing sector is normally extremely sensitive to wages, it was only through the "reforms" passed under Clinton & Shrub that this constraint was overcome, which as we all now know, caused the rampant looting and current collapse.

At some point this imbalance will be addressed, intentionally or otherwise, so it is in our best interests to address this intentionally so that the consequences can be more controlled. If we stay on this path, pouring money we don't have into propping up unsustainable prices, the correction will occur anyway and the consequences will be much worse.
:kick: & R