Here is the link to the NAR website...
And the Republicans were so scared to get rid of it for a flat tax. Øbama is bold and fiscally ignorant
>> “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