Here We Go Again

[ZZGAMAZZ]

I am talking as an economist here with reference to tax policies and not just housing policies. The fact is the mortgage deduction has always been regressive. It has been promoted by the NAR which is a huge lobbying group. Yes home ownership is important, but if the mortgage deduction is so vital then has it caused the value of homes to be inflated? In other words it has never really made an impact on affordability. Everything finds its balance. Now that we take the large mortgage deduction out of the mix values will again have to find their balance relative to the consumer's ability to pay. Simple supply and demand. The question is what percentage impact will it have. I don't think anyone really knows for sure. My guess is that it will depend largely upon the tax bracket of the homeowner and the size of mortgage that homeowner has. Thus for homes most likely purchased by upper middle class and in the higher range of the market the impact will be more noticeable. For homes purchased on the lower end of the market; not so much. Where values are extremely high for modest homes like CA, NJ, etc it will most likely make an impact in the short run. But in the long run things will find their balance.

But I always wonder about statements that appraisals are over inflated. How is that determined? AVM? Audits? Reviews? I just wish there was more substance about how that statement was substantiated.

Unfortunately, it's not as though a collective voice exists to question statements ostensibly true, on behalf of reason . BTW as a critical thinker you absolutely must get a copy of the recent "Economist" magazine (a weekly edition sometime in November '18) that addressed the "Next Major Recession," including the weak potential impact of low interest rates, which could cripple the ability of the Fed to "quantitatively ease" the nation out of the next crisis. The issue also describes various research results that tend to debunk economic theories presumed to be absolute, such as Large Numbers. That edition of the magazine is a must-read, as least for posers like me who can repeat what they read about economics but who are unable truely to internalize the info!

 

[Mike Kennedy]

I am talking as an economist here with reference to tax policies and not just housing policies. The fact is the mortgage deduction has always been regressive. It has been promoted by the NAR which is a huge lobbying group. Yes home ownership is important, but if the mortgage deduction is so vital then has it caused the value of homes to be inflated? In other words it has never really made an impact on affordability. Everything finds its balance. Now that we take the large mortgage deduction out of the mix values will again have to find their balance relative to the consumer's ability to pay. Simple supply and demand. The question is what percentage impact will it have. I don't think anyone really knows for sure. My guess is that it will depend largely upon the tax bracket of the homeowner and the size of mortgage that homeowner has. Thus for homes most likely purchased by upper middle class and in the higher range of the market the impact will be more noticeable. For homes purchased on the lower end of the market; not so much. Where values are extremely high for modest homes like CA, NJ, etc it will most likely make an impact in the short run. But in the long run things will find their balance.

But I always wonder about statements that appraisals are over inflated. How is that determined? AVM? Audits? Reviews? I just wish there was more substance about how that statement was substantiated.

The appraisal bubble – Center for Public Integrity

https://publicintegrity.org/environment/the-appraisal-bubble/
Apr 14, 2009 - In run up to real estate bust, lenders pushed appraisers to inflate values ... Fannie Mae and Freddie Mac, the two largest purchasers of home loans, ... If an appraisal came in lower than the purchase price, the loan likely would ...


Fannie and Freddie approve thousands of loans with no formal ...

https://www.washingtonpost.com/realestate/fannie...appraisals/.../50503d9c-4c95-11e8-a...
May 2, 2018 - During 2017, Fannie Mae acquired roughly 60,000 no-appraisal mortgages ... the contract price you're paying for the house may be inflated.

Inflated Home Appraisals Rules - Mortgage Loan

https://www.mortgageloan.com/new-rules-to-control-inflated-home-appraisals-2886
Feb 23, 2009 - New Rules to Control Inflated Home Appraisals ... mortgage brokers to tweak home values and influence housing prices up or down. ... against mortgage giants Fannie Mae and Freddie Mac,appraisals will be governed by a ...

Fannie Mae- appraisal came lower - Realtors Marketing Tips, Talk ...

https://www.agentsonline.net/forums/...php/.../Fannie_Mae_appraisal_came_lowe.html
Feb 13, 2013 - 15 posts
Appraisal came way below the purchase price. Does fanie mae do the ... Fannie has been inflating appraisals for years. Homepath is a total ...

Appraisal Institute News | Appraisal Institute

https://www.appraisalinstitute.org/mobile/news/?CategoryId=2&F_All=y...y
Sep 26, 2018 - Airbnb Drives Up Rents, Home Prices, Research Shows .... Fannie Mae Eases AppraisalRequirements on Lower LTV ... A federal court found that Quicken Loans provided appraisers withinflated estimates of property values ...