While the efforts of the Obama Administration to take aggressive measures to stabilize both the housing market and the nation’s economy can be applauded, there is concern that the provision has the potential to become a major impediment to a recovery in real estate markets across the nation.
Both the State and National Associations of REALTORS® are opposed to the provision and are prepared to use its formidable array of resources against its enactment.
As currently drafted, the plan changes the mortgage interest deduction by reducing the amount of mortgage deductibility for families earning over $250,000.
This proposed change in the mortgage interest deduction will result in further erosion of home prices and home values.
If this proposal is enacted, it is likely to set in motion a new round of price depreciation and cause greater distress on the balance sheets of banks as the collateral value of mortgage backed securities declines. A second credit crisis could emerge before the first one is resolved.
As you read this, both CAR and NAR are launching a multiphase plan of action to eliminate this provision from the budget plan. NAR already has expressed its concerns directly to President Obama and to all members of the United States House of Representatives and the Senate.
It also is placing advertisements in the publications read by Washington, D.C. decision makers. Additionally, it is forming a coalition with other groups affected by this proposal.
Few issues are more sacrosanct to homeownership than protecting the mortgage interest deduction. A reduction for those earning more than $250,000 will negatively impact the California housing market, further erode opportunities for homeownership in our state, and will contribute to further price declines and diminished equity for homeowners already reeling from the economic downturn.
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