Fight the power

The mortgage interest deduction is being challenged in Congress for homes over 3000 square feet. Were you aware of this fact?

The ability of homeowners to write off their mortgage deduction is the single most powerful incentive to encourage home ownership in the United States. What can be better for the American economy than homeowners contributing to the local economy in the form of property taxes, home improvement projects (i.e. trips to Home Depot, Lowes, the local contractors and sub-contractors, etc…) garden care, and all of the other ancillary services which support this massive industry. The prospect of homeownership for all American is a wonderful dream that gives us all the hope and drives us to become better. Homeowners contribute and pump money into the local economy, which means more jobs get filtered down: the trickle down theory truly at work. The mortgage tax deduction is at the center of this dream and is as American as apple pie and baseball.

However, in the name of reducing global warming, which is a fine idea in my opinion by the way, Congress is about to go overboard once again. True, this proposal will not affect most of us in Silicon Valley as a typical home is not 3000 square feet or larger. However, once this holy grail of property owner rights is challenged, everything else is up for grabs. 3000 square feet or lager is the start of the slippery slope; it will eventually end with the complete elimination of the mortgage interest rate deduction: mark my words.

You may not be aware, but this is not the first time your government attempted to chip away at this particular right. It is being challenged again in a different light; it will be challenged again if this particular proposal is defeated. Once this right is eliminated, the next generation will have even more difficulty affording homes in this area. The affordability index in Silicon Valley is already at a mere 21% (compared to 24% for California and 62% for the nation) as of Q2 2007. This means only 21% of first time homeowners in Santa Clara County can afford to buy a median priced home (which is $800,000 as of July 2007 in Santa Clara County). Taking away a homeowner’s right to write of the interest on their mortgage payments will surely further negatively impact the affordability index, and therefore, reduce ownership to an even worse situation that it is now.

Don’t allow short sighted politicians to take away something as important as this to the local economy and continue to support the effort to encourage home ownership for every American. Homeownership should become easier with successive generations, not more difficult. The government should remove hurdles, not throw them in front of us. Let your Congress-person know you will not support such an effort.

Steve Mun, Silicon Valley Realtor
www.stevemun.com