Slate quoted Richard Green of the USC Lusk Center on how the Republican tax reform bill may negatively impact homeownership in California, but would not be catastrophic.
Because they’re designed to cap popular deductions that benefit homeowners and limit the number of itemizers, the Republican tax bills are expected to put a dent in house prices around much of the United States. And, under the recently passed Senate version, nowhere seems to get it worse than the Garden State. According to modeling by Moody’s Analytics, 15 of the country’s 30 hardest hit counties would be in New Jersey. Homes in the lovely bedroom communities of Essex County, just over the river from Manhattan, would suffer the country’s biggest setback, losing more than a tenth of their value.
A recent federal reserve board paper suggested that killing the mortgage interest deduction entirely would result in an almost 7 percent decline in home values nationwide. But Richard Green, who chairs the University of Southern California’s Lusk Center for Real Estate, told me that thanks to changes in the housing market, there are reasons to think that curtailing the tax incentives for homeownership wouldn’t deal as big a blow to prices as it would have in the past. “Could it have a mildly depressive impact on housing? Sure. Would it be catastrophic? No.”