GOP tax bills could weigh on high-end housing in California
San Francisco Chronicle quoted Richard Green, director of the USC Lusk Center, on how the GOP tax reform bills might influence homeownership trends in California.
Richard Green, a real estate professor at the University of Southern California, calculated that if Congress got rid of the mortgage interest deduction entirely, it might reduce the U.S. homeownership rate, currently around 64 percent, by about a half a percentage point, but prices could fall by 10 to 11 percent. “You have high-income people outbidding lower-income people for the same house because they get a bigger tax break,” he said. If you remove the deduction, they would still buy a home, but pay less for it. If you cut the maximum deduction in half, “you might knock (prices) down 5 percent. Given that they are rising 3 or 4 percent (a year) it wouldn’t be noticeable,” he said. It could even be good if it makes housing “a tad bit more affordable.”