2016 Postmortem
In reply to the discussion: How much does the Mortgage interest deduction really save us? [View all]unblock
(52,208 posts)yes, i understand, had there never been a mortgage interest deductions, the house i'm in would have been cheaper than it is today.
my ability to spend on house would have been less, but then so would the price of my house.
i understand the argument and agree with the concept, but there's simply no way house prices would come down to completely offset my lowered affordability. mainly because i'm the worst case, my mortgage is now in fact over 100% of the house value (i was a responsible borrower when i sign up, honest!) and i'm only a couple years into my 30-year mortgage, and therefore the bigger chunk of my mortgage payment by far is interest. someone who needs a much smaller or shorter mortgage isn't affected nearly as much; deductibility doesn't drive them completely out of the market and cash buyers aren't affected at all.
prices would come down, that's for sure; but not enough to make the whole thing a wash.