Shift the relief to renters by doing __everything__ possible to have more rental units on the market. The only way to ensure competition in this space is to have over-supply of potential units so that bad pricing and poor service have the relief valve of moving somewhere else (near by).

You could also remove the MID on second homes, which are generally a true luxury.

Interest is only deductible on the first $1m of a loan already.

Right, I'm saying if a property requires a loan of $1m+ you'd kill MID entirely — including the first $1m.

These step-wise functions cause all sorts of weird, undesirable distortions.

What we have now are weird undesirable distortions from like, WWII-era politics. The best government seems to be able to do is shift distortions to relevancy.

It sucks to be in the bay area, where houses start from 1.XM$.

This is the wrong time in the cycle to buy a house in the Bay Area, unless you're filthy rich.

I think part of the game is to not think too much about that. Crisis happened in 2008, but it bounced back pretty fast.

Check this: http://www.paragon-re.com/3_Recessions_2_Bubbles_and_a_Baby

To me this long term trend is teling me that the drops are only temporary and contained for about 3-5 years. Sure if you buy at the peak, there is a chance that you might owe money to a bank for something you do not own (negative equity that is), but it will bounce back.

unless, you know, detroit thing happens, or that california defaults (because of pension crisis, etc), or it raises taxes too much.

i am not a fortune teller, obviously, but bay area has been its own bubble for quite a while now.

Just because it bounced back doesn't mean it didn't just double down on the existing bubble.

If prices vastly outstrip the ability of ordinary people to afford it, you're detached from reality.