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.