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Is there an artificial inflation of house price because of the deduction allowance for mortgage interest? I have read that construction cost is down and is one reason why huge McMansions are being built. If the deduction goes away would it bring real estate prices down? isn't that better in final analysis that demand will pick up, and more medium size houses in mid range price, which are now in short supply, will be built?
MathJak, note the OP was talking about McMansions and not your basic middle class home. So for buyers a drop in prices is good but for Boomers wanting that equity to boost their retirement maybe not so. Part of the move up in housing movement was based on building equity quickly, increased earnings and using the two to purchase a new home. Key in all of that affordability was the ultimate real annual cost which included tax deductions. That cycle can still be playing out with younger professionals. Often a move occurred as kids were about to enter school to the best neighborhood school cluster they could afford etc etc.
i doubt mcmansions will see much change either . if anything starter homes may be effected the most .
How many buyers of starter homes itemize in most areas? In my adult working world, folks bought their first house prior to having kids so no deductions there.
Is there an artificial inflation of house price because of the deduction allowance for mortgage interest?
I have read that construction cost is down and is one reason why huge McMansions are being built. If the deduction goes away would it bring real estate prices down? isn't that better in final analysis that demand will pick up, and more medium size houses in mid range price, which are now in short supply, will be built?
I don't know about that but I do know what inflates the prices of ALL real estate by 6% in the country and supports an army of people who have no barrier to entry, are almost functionally and mathematically illiterate, have almost no legal obligation in the whole deal and in reality act as glorified door openers and often screw up more deals than they actually help. Think about it - 6% of ALL real estate transactions in the country - how much money is that and how long before someone figures out a way to automate these folks away?
that is s my point . it is local market dependent . you had areas unscathed and other areas that got hammered in the great recession .
Housing market impacts of the recession of 1990-91 were regional. Those of the Great Recession were national. Everywhere was hit in one manner or another.
Quote:
Originally Posted by mathjak107
there is no rule that makes it a given that the loss of a deduction will change a thing .
Yes, there is. What there isn't is a rule proclaiming that the effects of eliminating the deduction could not ultimately be overshadowed by the effects of other factors.
I don't know about that but I do know what inflates the prices of ALL real estate by 6% in the country and supports an army of people who have no barrier to entry, are almost functionally and mathematically illiterate, have almost no legal obligation in the whole deal and in reality act as glorified door openers and often screw up more deals than they actually help. Think about it - 6% of ALL real estate transactions in the country - how much money is that and how long before someone figures out a way to automate these folks away?
ROTFL
Notice how nobody bothered to reply to this blather?
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