User 229895

The Case for Higher Interest Rates and Lower Home Prices

Why don't we just eliminate the mortgage interest deduction! Then rates will plummet,home prices will crash and the government will have even more $$$ to spend hiring people to work tearing down all of the vacant McMansions in California.
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On Dec 25 10:42 AM D. McHattie wrote:

> Blasphemy!
>
> But a very clear insight. The best thing for the housing market is
> for prices to fall. Lower prices are better for first-time buyers,
> better for homeowners with little equity and better for homeowners
> with significant equity in their homes.
>
> 1) First-time buyers - the benefits are pretty obvious here. Pay
> less and get more house.
>
> 2) Homeowners with little equity - they can walk away from their
> mortgage, rent for a few years while saving money and then they enjoy
> the same benefits as first-time buyers.
>
> 3) Homeowners with significant equity - if you stay in your home
> your mortgage doesn't change, you still have the same house and nothing
> changes. If you want to move, the equity you bring to your new home
> will remain the same relative to your new home since the price of
> your new home will have shrunk.
>
> The best part of this solution is that it requires no additional
> government or central bank intervention and no additional taxpayer
> liabilities. Unfortunately this will not be seen as a good thing
> to politicians and bureaucrats or to a great portion of the electorate
> who do not realize that money spent by the government comes only
> from the taxpayer.