Housing Insight

I read a great article in Money Magazine last night that was an interview of Edward Glaeser who is a Harvard economist.  Here are some of the things that really stuck out to me.

On real estate values:  “The price of a home should be the cost of construction plus land plus reasonable developer profit.”

The problem with mortgage interest deduction:  “It’s very strangely designed.  If the goal were to encourage homeownership, you’d want to target the people on the margin between renting and buying, people early in their lives.  But because a tax deduction is worth more to higher earners, we have a policy that gives 10 times more benefits to Americans earning more than $250,000 than to households earning less than $75,000.”

He goes onto say that reducing the cap from a $1 million of mortgage debt to between $200,000 and $250,000 would eliminate the most regressive aspects of the tax, and it wouldn’t touch the majority of Americans. 

It is an interesting idea.  I don’t know enough about it to comment too much. 

Many places are going to have big fights over tax assessments:  “We could move toward a system where assessments are tied to benchmarks like the Case-Shiller Index.  Then we don’t have to waste countless hours arguing.”

I do like that however I did hear that the Case-Shiller index doesn’t take into account homes over the conforming limit of $417,000.