The Real Estate Bloggers

The Coming Battle Over The Mortgage Interest Deduction

Posted: 02 Dec 2010 05:19 AM PST

Realtorfight The real estate and mortgage lobby will be going to battle in Washington DC soon as the deficit commission is calling for the elimination of the mortgage interest deduction.

For myself, it is an internal battle. As an advocate for the real estate industry the loss of the mortgage interest deduction will hurt the value of homes on the higher end of the spectrum and demotivate those looking to move up to larger homes.

We will see housing prices drop as home ownership costs rise. It is that simple. When the cost of housing on an annual basis rises by removing the mortgage interest deduction the price of housing will have to drop to find equillibrium.

But the side of me that wants to see Washington’s influence in our lives diminished is not too upset. Social policy being dictated by our governmental officials, or worse the bureaucrats, makes my stomach turn.

What the worst case scenario would be in the housing industry give away one of the better incentives for home ownership to pay for even more societally debilitating social programs. That would be a lose – lose situation in my humble opinion.

If you really want to delve into the questions facing the National Association of Realtors and the Mortgage industry in the battle over the home interest mortgage deduction, check out one of my favorite real estate bloggers, Rob Hahn. He has a powerful post on the battle over the mortgage interest deduction here.

NAR has finally gone to the mattresses over Federal policy. Some time ago, I wrote that the mortgage interest deduction may be phased out or limited as part of Obama Administration’s new “sustainable housing” policy. At the time, I’ve heard quite a few people say, “It’ll never happen”. The thought was that the public loves the MID so much, they feel entitled to it, just like Social Security and Medicare. Plus, NAR is such a powerful political operation that no politician would ever dare touch the MID.

Well, the White House Deficit Commission unveiled its recommendation today, and guess what? The MID is most definitely on the table for outright elimination or significant limitation.

Now go read the rest of the article.

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The Coming Battle Over The Mortgage Interest Deduction