Housing economists and lobbyists will be listening closely to President Obama’s State of the Union address later this month.
Specifically, they want to hear his plans for the future of the mortgage interest deduction. A deficit commission had proposed reducing the deduction to 12% - and only for mortgageholders’ primary home - but did not get the votes necessary to proceed. Still, the idea alone ruffled the already-shaky housing sector-and they’re bracing themselves for a fight.
“It would not surprise me to see at least a hearing process,” said J.P. Delmore, the federal legislative director of the National Association of Home Builders, which is holding its annual convention here this week. “Changing it into a 12% nonrefundable tax credit for a couple today would be a significant cut,” he said. “The mortgage interest deduction is worth 25 cents on the dollar to them.” That, he said, could be result in a further depreciation of prices and a deterrant to buyers on the fence.
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