If it be good enuff for my bro....
Posted on 02/27/2009 6:06:50 PM PST by free-n-TX
And in order for it to pay off, you have to have a lot of other deductions.
The deduction does not benefit the buyer, as is often claimed. If it ever did, the benefit was short-lived.
No, it’s there for the benefit of the seller.
>> “This proposed change in the Mortgage Interest Deduction will result in further erosion of home prices and home values.”
This sentence illustrates a basic lack of understanding on the part of most real estate “professionals,” not to mention buyers and sellers: The conflation of the terms “price,” and “value.” The “value” of a real property (or anything else) lies in its UTILITY: what it can be USED to accomplish. For a house, the value lies in its capacity to be used for basic shelter. This value is usually approximated by the rent which could be gotten in the current rental market.
The “price,” on the other hand, is often substantially divergent (from the “value”) especially on high end properties. This difference is a reflection of the many factors which modify the thought processes of buyers and sellers. Factors like LOCATION, view, aesthetics, impatience, nostalgia, and the availability of money.
>> “If this proposal is enacted it will set of a new round of price depreciation...”
Well, probably, at least on the high end properties these folks want/own. But, also probably a limited effect, since $Million houses are already priced nowhere near their utility value, and it is only a LIMITED reduction. On the other hand, more reasonably priced houses are typically priced closer to their value. These are also often purchased by people right on the edge of their ability to pay. Maybe both spouses working, and a high percentage of income to housing payments.
In these cases, the interest deduction is a requisite for them to be able to handle the payments. If this deduction is taken away, (or if one loses his/her job) they will NOT be able to go on. Even if they are able to sell, they will not be able to buy another house, unless at a much lower price. The market would collapse.
The harsh reality is that we have been experiencing a “bubble.” High rate of employment, easy money, and idiotic government programs, (among other forces) has driven prices absurdly out of line with “value.” “Bubbles” ALWAYS collapse. ALWAYS. The best one can hope for is that it will slowly deflate with a gradual removal of the excessive “pressures.” It is insanity to imagine that any bubble will last forever, and foolishness to attempt to “pump it back up,” once it starts to deflate.
Unfortunately, that is what Obama is doing.
DG
I’d be in favor of eliminating all deductions — if witholding was also eliminated and elections were held on April 16th.
If these “rich” people who make over $250,000 a year have any money left they need to go take the money out and pay off their mortgages.
You need to ask why the brokers were pushing mortgages to the unqualified.
I am a member of the NAR and a Real Estate Broker...Many of these Mortgage Brokers preyed on immigrants of their own country of origin and didn’t care...it made money for them...Many of us saw this whole thing coming.
OK so the African dictator is elected by the American Idol viewers and then everyone is surprised when he acts like an African dictator!
Time for a commercial! NOT....
We allz gon be livin in huts directly.
If it be good enuff for my bro....
Then go and slit your wrists.
Well, this is where even I draw the line. Interest on hovel mortgages should be deductible!
A family which earns $250,000 and owns a $450,000 house with 10% down and a 7% fixed-rate mortgage cannot deduct all mortgage interest.
But a their next door neighbor, who earns $100,000 and owns a $500,000 house with zero down and a 9% interest only loan gets to deduct all mortgage interest.
Who is John Galt?
They were convinced by artificially low interest rates and the hope that they could make $50,000 in 6 months.
This is insane.
Every single time the federal government changes the real estate tax laws the housing market tanks.
Eliminating the mortgage deduction will destroy the market.
Obama is destroying our economy and our country.
The definition of “rich” will vary with this administration/dictatorship.
I agree, though, that people should pay off their mortgages.
What’s so magical about $250,000? Back around 1975, Harper’s or Atlantic Monthly had an article about WHO was rich. The author decided that $100,000 a year income was “rich.” One would have to earn more than $400,000 a year to equal that today. My guess is that individuals/households who earn betweeen $250,000 and $500,000 a year will contribute a very small fraction that is needed to fund this monstrous budget, that it will hit mainly professionals and small business owners hard because it will erode away their margin enough to put them into distress. Their whole business model will be useless. But Obama is clueless about such hard facts since hhis earning have come from celebrity, like some actor who has struck it rich. He has far more in common with George Clooney than any businessman.
“I’m more than ever convinced that there will be a Call To Arms in my lifetime.”
Amazing to think that 20 years ago, when Reagan left office, that kind of thought was unimaginable. Now it almost seems inevitable.
But at the same time, don’t underestimate the motive force of the Community Reinvestment Act, as turbocharged starting in the Clinton years. Please review the documentation
I agree, I know exactly what happened...I worked 30 years in the Financial Markets at the Chiago Board of Trade before becoming a Real Esate Broker...What motivates the markets is $$$...whenever you have the Fed’s coming in and telling a business how to run things, then they will FIND a way to get some of their money back. I have worked with these people that were given loans they should never have received, but they felt that they were intitled to the “American Dream” and under “Licensing Law” we can not say anything..Could mean “Punitive Damages” if I offer any opinion. I guess that makes me a Sheeple. Not proud of it.
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