Just had a right-winger, a banker, in my office this morning

[CreekDog]

72. I usually agree with you on most things, but you need a reality check man

I'm in one of the most unaffordable places in the country.

Housing is so expensive here that the tax deduction is often the difference between getting a place, and that may not be a house, but a tiny condo, even for a family.

Here is what you're glossing over:

First, the loss of deductibility increases the cost of housing for those who have housing and for those who want to buy. PERIOD. Especially because the hit is the loss of the State Income tax deduction combined with limiting the property tax deduction, not to mention making the median home here beyond the deductibility limit. The MEDIAN home.

Second, there are TWO possibilities here, in BOTH cases, the net costs go up even if prices go down.

1) People are screwed because the after-tax cost of housing just got more unaffordable because simply, it costs more of our net income, whether we currently have a place or are trying to get one.

2) People are screwed because the prices have gone down, therefore, they have lost equity, but are still paying the same mortgage, but out of pocket costs have gone up due to loss of deductibility.

You probably will argue supply and demand and I'll tell you that even during the great recession, there weren't a lot of properties to buy because, guess what, those of us who were underwater, lots of us, couldn't sell to cover our mortgages so there wasn't much inventory.

So you drop the prices but you literally see little benefit from doing so, because the net cost of housing goes up for owners and buyers compared to before, even if the prices drop.