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January 02, 2013



A guest opinion piece in the DJ by Anne Oliva who is the 2012 President of SAMCAR puts a number to the real estate market disruption I mention in the post. Here is a clip from her piece:

Recent discussions at the federal level have included outright elimination of or changes to the mortgage interest deduction. This isn’t complicated — the mortgage interest deduction is vital to the stability of the San Mateo County housing market and economy. Any change to the mortgage interest deduction will harm a tenuous economic recovery, make homeownership less affordable and reverse a 100-year commitment to housing.

To change this established portion of the U.S. tax code would be to change the rules in the middle of a game, resulting in a massive unexpected redistribution of wealth in the country as most people itemize the mortgage interest deduction at some point in their homeownership.

Because of the capitalization impact of the expected stream of future mortgage interest deductions, removing the mortgage interest deduction would decrease home values (conservative estimate) by 15 percent, according to the National Association of Realtors, and destroy $2.5 trillion in housing wealth ... and that includes the wealth of homeowners who own their homes free and clear. That’s a big hit on a family’s pocketbook any time, but especially now.

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