Last week we asked readers how they felt a change in the mortgage interest deduction would change things in the industry. Here are some of the answers we received.
Larry Kush, national area chairman, NAHB: There are many good reasons to keep the MID. And the reasons to kill the deduction just don’t hold water. First of all, a home of your own has always been the foundation of the American Dream. The social benefits are immense. …
Documented research has shown that there is higher educational performance and better behavior among children of homeowners, that crime rates are lower, there is less dependency on welfare, greater household participation in civic affairs, and better household health. As intangible as some may paint it, pride of ownership is the number one reason why people strive to own their own home.
From a financial standpoint, there is absolutely no question that buying a home has a number of advantages: deduction of mortgage interest, deduction of real estate taxes, capital gain exclusion, and the fact that, regardless of market ups and downs, in most cases the value of the typical family home is that family’s major asset. Paying off a mortgage for many has become a form of enforced savings.
Economists, market experts, and analysts agree that elimination of the MID would result in a further drop in home values. There would be even more foreclosures. Home sales would suffer, and even greater unemployment would result. …
Public support for retaining the interest deduction is overwhelming. According to a nationwide survey of likely voters this past September, nearly 80 percent support retaining federal tax incentives to promote homeownership, which has been in the tax code since the introduction of federal income taxes in 1913, nearly a century ago. ... An even higher percentage (82%) of renters favor providing tax incentives to promote homeownership. Most renters aspire to someday become owners.
Timothy Dennis: Elimination of the MID would severely hurt a lot of people. Putting limits on the MID is the way to go by my thinking. The clients that are building 4,000 square feet and up can take the hurt. Instead of building 6,000 square feet, maybe those people would become a little greener at the same time and build a 5,000-square-foot or, even better, a 4,000-square-foot house—still a good size shack. Who really needs 6,000 square feet, or as we did a few years back, 10,000 square feet?
If the average home is 2,400 to 2,800 square feet, base the MID on that factor. In dollars that would be $250,000 to $300,000. My experience has been that the owner who is building 6,000 square feet is not driven by the MID as much as they are driven by having what they want, and therefore most of them do exactly that: build what they want. So let them have it, but there is a price to be paid for that luxury. We did it with automobiles with the first energy crunch, so let’s wake up and be more practical in our dealing with what I am perceiving as the “long crunch.”