I for one never try to mix politics with my occupation. Online Real Estate and Real Estate leads are all I am supposed to focus on, but with the election only a couple of days away I am forced to think about how this election could either help the market or lead Real Estate from out of the cloud it has been under for nearly 6 years.
Democrats and Republicans each think they have the magic potion under their pillow cases but the market will decide much of that. And what is the Real Estate market? You and I, that is the real estate market. It is not some far off nebulous “They” it is “Us”. And we make the market with our action or inaction.
Will reducing or eliminating mortgage tax deductions as the Simpson Bowles commission suggested improve the likelihood that more of us will save money to buy a home? Or will it reduce the desire to buy a home especially considering that the concept of appreciation has all but been erased over the past 5 years.
A home as an investment is in large part because of two major factors. If the feds determine that they want to do away with the mortgage tax deduction that will remove one of the strongest motivations for saving and maintaining a home for many of us. Wouldn’t life be a pot load easier if all we had to do was call the landlord every time something broke in our home? Toilet blows up…call the landlord. Need a new roof?…call the landlord.
Seriously I hate being my own landlord.
But mortgage tax deductions and appreciation make us remember that we are supposed to be a responsible adults, which means that we create wealth for the safety and security of our families. So now if there is no mortgage tax deduction we are left with appreciation as our only motivating force. As an example: My car doesn’t appreciate, so I lease it. And because I lease it I have to admit that my service records do not indicate that I am what some people call “fastidious.”
I drive through rental neighborhoods, we all know what they look like. Cars on the street, some on cinder blocks, yards not kept up with, it is part and parcel with not taking ownership or responsibility for the home that we live in.What would keep me from treating the home I rent with the same lackadaisical approach that I bring to my leased car? If I don’t benefit from it financially I think I take care of it with less interest. I am not saying I would let the grass grow up to the second story windows, I am just asking myself if I would have the same degree of pride if the home was someone else’s? This lack of motivation leads real estate renters to not keep up with their homes with the same level of investment as owners.
In closing. I strongly believe that the mortgage tax deductions leads Real Estate owners to take more pride and is integral to the health and well-being of the home, the neighborhood, the City and State. When appreciation comes back into full swing as it will, as it always has, the answer gets somewhat more complicated but then again when depreciation also occurs as it always has, then what?