Size of home, homeownership, and the mortgage interest deduction

Hanson, Andrew

doi:10.1016/j.jhe.2012.06.001

Cited by 64 publications

(53 citation statements)

References 26 publications

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“…Hilber & Turner (2014) stress that the tax deductability of mortgage interest payments is a relatively expensive subsidy and ineffective in promoting social inclusion. They also note, as does Hanson (2012), that this tax incentive tends to be unassociated with home ownership attainment in aggregate. Hilber & Turner (2014) furthermore find that the tax deductability of mortgage interest payments helps explain home ownership attainment of higher income households in an environment where housing supply is flexible.…”

Section: Housing-related Fiscal Policy and Societal Outcomesmentioning

confidence: 81%

“…Housing owners may over-consume housing services if mortgage interest payments are tax deductible and imputed rent from owner-occupied housing is not taxed (e.g., Gervais, 2002;Glaeser & Shapiro, 2003;Hanson, 2012). Gervais (2002) suggests that welfare could be gained from abolishing the tax deductability of mortgage interest payments.…”

Section: Housing-related Fiscal Policy and Societal Outcomesmentioning

confidence: 99%

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Housing, Finance, Policy and the Wider Economy

Winkler¹

2017

JMS

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Building an understanding of the complex dynamics between housing, finance, policy and the wider economy is a critical step towards the development of a strategy that permits policy makers to leverage resources and enable the housing market to function better in the pursuit of economic, financial and social objectives. Powerful real, legislative and financial circuits suggest that an enabling strategy for housing can support societal progress and wellbeing. By summarizing the key findings in the existing theoretical and empirical literature, this study helps to explain the complex interrelations between housing, finance, policy and the wider economy by using a simple model; it also deals with housing-related policies and their effects, examines the rational for housing market regulation, investigates whether housing market corrections threaten financial and macroeconomic stability, and asks whether policies are efficacious at controlling housing market outcomes. The important takeaways from this study are: (i) policy setting should be evidence-based, which necessitates further efforts to address existing data deficiencies; (ii) finance trends are in flux and policy effects can be asymmetric, which necessitates regular and critical housing market reviews to identify misallocation, dislocation and reform needs; (iii) improvement in the functioning of the housing market requires a coordinating authority that takes steps to reconcile the various housing market stakeholders' mutually incompatible interests and arrange for concerted policy and institutional reforms. The study closes with an outlook on future research.

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Section: Housing-related Fiscal Policy and Societal Outcomesmentioning

confidence: 81%

Section: Housing-related Fiscal Policy and Societal Outcomesmentioning

confidence: 99%

Housing, Finance, Policy and the Wider Economy

Winkler¹

2017

JMS

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“…Since the benefits of the deduction accrue overwhelmingly to high-income households who would own a home regardless of the tax benefits, the MID is an ineffective tool for reaching low-or moderate-income renters on the margins of ownership and looking to buy a home (Glaeser and Shapiro 2003). Highlighting the ineffectiveness of the mortgage interest deduction for expanding ownership opportunities, Hanson (2012) Critics of the MID often note that the revenue foregone through the policy exceeds the entire budget for low-income rental housing assistance through the Housing Choice Voucher programthe largest program to assist low-income Americans in securing stable, affordable rental housing.…”

Section: The Mortgage Interest Deduction: History and Critiquementioning

confidence: 99%

Costly, Regressive and Ineffective: How Sensitive Is Public Support for the Mortgage Interest Deduction?

McCabe¹

2018

Preprint

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This paper investigates whether public support for the mortgage interest deduction is sensitive to critiques of the policy as regressive, costly or ineffective. The deduction is a popular social policy that lowers the cost of owning a home for some homeowners by enabling them to deduct their mortgage interest payments from their federal tax liability. Although the deduction enjoys broad public support, critics argue that it disproportionately benefits wealthy households, fails to expand homeownership opportunities to households on the margins and costs the federal government an extraordinary amount of money in foregone tax revenue. Drawing on data collected through an on-line experiment, this analysis tests the sensitivity of public support to these critiques. The findings reveal that support for the mortgage interest deduction declines when respondents are presented with information about the cost, effectiveness or distribution of benefits associated with the deduction. Disaggregating support by political party and homeownership status reveals that support among renters is more sensitive to framing effects than that of homeowners. Republicans are less sensitive to framing effects than Democrats when the deduction is framed as distributing benefits unequally, but more sensitive to these effects when the issues is framed as costly. However, all groups register their lowest level of support when told that the mortgage interest deduction is not an effective tool for expanding ownership opportunities.

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“…Casas-Arce and Saiz (2010) examine how different jurisdictions' legal systems and propensity to enforce contracts affect ownership propensities. Hanson (2012) looks at how the mortgage interest tax deduction interacts with home sizes to affect ownership rates in the US. Hilber (2005) examines neighborhood externality risks in the AHS and finds that they are negatively correlated with homeownership.…”

Section: Relation To the Literaturementioning

confidence: 99%

The housing stock, housing prices, and user costs: the roles of location, structure and unobserved quality

Halket¹,

Nesheim²,

Oswald³

2015

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Using the English Housing Survey, we estimate a supply side selection model of the allocation of properties to the owner-occupied and rental sectors. We find that location, structure and unobserved quality are important for understanding housing prices, rents and selection. Structural characteristics and unobserved quality are important for selection. Location is not. Accounting for selection is important for estimates of rent-to-price ratios and can explain some puzzling correlations between rent-to-price ratios and homeownership rates. We interpret this as strong evidence in favor of contracting frictions in the rental market likely related to housing maintenance.

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Size of home, homeownership, and the mortgage interest deduction

Cited by 64 publications

References 26 publications

Housing, Finance, Policy and the Wider Economy

Housing, Finance, Policy and the Wider Economy

Costly, Regressive and Ineffective: How Sensitive Is Public Support for the Mortgage Interest Deduction?

The housing stock, housing prices, and user costs: the roles of location, structure and unobserved quality

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