“For the first time in a century, the federal government has backed away from subsidizing homeownership as a pathway to the “American Dream.””
Why I should finish reading the article after that statement? It’s the type of purposely misleading statement that’s designed to create an emotional reaction. The reader ends up angry and thinking they are informed. They are actually misled and misinformed.
The government has backed away from subsidizing ownership of $1M+ homes. ~2 million homes are worth over $1M. The other 98% of American households aren’t going to feel sorry for people living in $1M+ homes. I’d love to know how many of the $1M homes are owner-occupied vs. vacation homes. There’s a lot of expensive beach front vacation homes in that 2M number.
Also, the $10K cap isn’t going to impact most people. Look at what median property taxes are in most states. Even if you add state income tax, people have to be well above median income and home value for the $10k cap to matter.
Then there’s the logic that propping up home prices via tax deductions helps people become home owners. I’d love to see how making home prices higher helps more people become home owners. It helps people who are already owners. Our home ownership rate has been in a very small range since 1970 outside of the no-doc loan days that led to the great recession. We literally say all these programs help increase home ownership, but there’s zero supporting data that says it’s working. Meanwhile, we have data that says home prices have been increasing faster than inflation since the early 70’s when we started trying to help increase home ownership. All we’ve done is make people more house poor with bigger and longer mortgages while increasing property taxes.
Then there’s all the countries that don’t allow deduction of mortgage interest, property taxes, or local income taxes on their federal taxes. Some how they real estate is still worth money, and their home ownership rates are similar to the US.
The rest ignores supply/demand and essentially assumes all houses would go up for sale at the same time. We know in the bay area only ~2% of homes are sold each year. Home building has lagged job creation by 8:1 for the last 9 years. Exactly how is the tax law going to cause a drop in home prices? It’s not going to change mortgage qualification unless they change the % LTV requirement. People will still qualify for the same mortgage amount they could before.