Don’t Eliminate the Mortgage Interest Deduction, Employ Basic Supply-Demand Principles!

With Shiela Mudd Roberts permission we are including here content from her blog post today about the current momentum in our legislature to eliminate the deduction for mortgage interest for homeowners.  Shiela has some great insights … read on below or link to her blog for this article and other great local real estate information.
“I have to admit, I heard blimps of this in the news over the past few months but it is so absurd that I didn’t think it would really happen. But then I saw a headline that read “National Association of Realtor’s Defend Mortgage Interest Deduction”. Well, absurd as it is, the current administration is trying to take the change right out of our pockets and, thankfully, NAR has already reacted.
The way it currently works is that if you have a mortgage, you very likely have interest that you pay on said mortgage. Look at your statement, especially for the first say 15-20 years most of your monthly payment is interest. This interest paid is then deducted against your earned income come tax time. If you have rental property or second homes, same thing. What is being proposed is that this annual amount, totaling thousands of dollars, is no longer going to apply for a tax deduction. Things are unclear whether the proposal will protect your primary residence or not. Regardless, just like for home owners, mortgage interest deductions combined with depreciation, is a huge incentive for investors to own rental property.

Instead of taking this away from everyone, limit supply. And let me be clear, if you own your property free and clear (no mortgage) this still effects you because this proposal will affect the housing market overall. Buyers lose incentive along with current home owners and prices will drop, plain and simple. I would think a more logical way to approach this is to limit supply, specifically: new building. Sure the big builders won’t like it, but it has been high time for them to find a new gig anyway. In turn, local governments should put a moratorium on new developments. I mean, really, do we need more track homes? Just look at Boulder. There is a housing cap meaning that the supply is limited. It is no accident that the City of Boulder has consistently held it’s housing values. And, in some price points, continued to appreciate in this National “Housing Crisis.” To hit this home even more, compare Boulder to Longmont (also in Boulder County). Longmont has allowed building virtually on all sides of its city borders. At the same time Longmont’s inventory is higher with decreasing sales prices over the past few years when compared to Boulder.*

What can you do? Contact your local representative to tell them that this is not okay:

*Based on IRES, LLC data”

Shiela Mudd Roberts
Broker Associate
Colorado Landmark, Realtors
(720) 628-8454