California Home Sales:
Eliminating The Mortgage Deduction Could Have A Domino Effect
California Home Sales Could Slow & Tax Revenues Fall If Deduction Is Eliminated Completely
California home sales, their rate and prices, can be effected by many things. The market is a complex and ever changing "animal" with many interlocking parts. One of those parts is the mortgage interest tax deduction. Its size ... and even its continued existence ... are both being discussed in Congress right now.
Opinions vary, but all seem to agree that elimination of this popular incentive to home ownership would have at least some effect on the California home sales market. The disagreement stems from just how much of an effect we would actually feel. Some say that it would force prices down as Sellers would need to compensate. Others say it would slow activity to a crawl as buyers decided to forgo home ownership entirely. Still others say it would have some effect, but not nearly as much as the "doomsayers" predict.
Here's an article from Jana Adkins in the Santa Clarita Valley Signal that runs through a lot of varying opinions. Jana ... or the headline writers at least ... seem to be of the opinion that removal of the deduction would have a huge impact. However, if you read through the article you'll find that the "experts" are really all over the map in their opinions.
Repealing the deduction would be bad for homeowners and it would be bad for cities and school districts that rely on property tax revenue,” Hernandez said. Such a change could potentially drive down home ownership rates, drive up the cost of financing, and push down the value of real estate, he said ... "
Does The Federal Tax Structure Control
The California Home Sales Market?
Wiith all this talk about the mortgage interest tax deduction and how it's elimination might effect the California home sales market, there is very little talk about what is more likely to occur: a compromise focusing on adjustment rather than elimination. Most of the talk is about what might happen should the deduction be removed entirely. However, it seems much more likely that complete elimination stands only an outside chance. A reduction in the deduction seems much more likely, and if this happens then it's also more likely that the less extreme predictions of how this will effect California home sales will probably be more accurate than those of the "sky is falling" variety.California Home Sales.