Re:Why Land and Homes Actually Tend to Be Disappointing Inve...
by gumby on Sunday July 17, 2016 @05:19PM
(#12111884)
> What I find silly is, is the gov't really subsidizing housing in the end?
> Offer a tax deduction on mortgage interest and people can afford a higher price so competition drives prices up and everyone ends up in the same place.
Exactly: it's a tax subsidy to sales agents (and others whose income depends on the transaction price). Homeowners don't get anything out of it except that their house has a larger $ on their list of assets. It doesn't help them buy a better house (since everyone in the same income bracket can afford the same house).
It's pitched as a middle class benefit though, so simplifying the system would be greeted with howls of dismay.
It does screw those of us who pay cash for our houses BTW.
Offer a tax deduction on mortgage interest and people can afford a higher price so competition drives prices up and everyone ends up in the same place. Same with lower interest rates, etc.
One could argue there is a period where housing is easier to purchase once a new subsidy is created, but shortly after that, the market reaches equilibrium and we're back in the same place.
Just imagine if there were no housing subsidies. Housing prices would be mich lower. And yes, I know that's a gross oversimplification, but I think the effect is still there.