Tax Change on Mortgages Could Shake Up the Housing Market<br />On Thursday morning, hours after the proposal was unveiled, Redfin, a national real estate brokerage firm based in Seattle, started drafting a memo to its more than 1,000 real estate agents instructing them to ensure<br />that prospective home buyers can still afford homes in their desired price range.<br />Even Mr. Kelman — a man whose fortunes are directly tied to commissions on homes bought<br />and sold — said it could be hard to see the usefulness of a deduction that so forcefully favors one group over another<br />“There are people writing offers on homes today who have spent the past few days trying to figure out if they can afford a home, and we need to put them on notice<br />that that might change,” said Glenn Kelman, Redfin’s chief executive.<br />The proposed bill has no phase-in period; people who bought homes before Thursday could continue claiming<br />the deduction on a mortgage up to $1 million, but after that, the ceiling is lowered by half.<br />The whittling away of the mortgage interest deduction gives homeowners one more reason to stay put, said Svenja Gudell, chief economist at Zillow.<br />Home sales have been sluggish of late, in part because homeowners who capitalized on rock-bottom<br />interest rates are staying put, reducing the number of available homes for sale.<br />It favors homeowners over renters, rich over poor,<br />and distorts the housing market and even migration patterns by encouraging people to leave smaller urban quarters for bigger and more tax-advantaged homes in the suburbs.
