Deductions Help Sellers
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How could you print, without comment, in the Washington Scene column, “Mortgage Tax Benefit is Threatened,” (Sept. 11) that reducing the cap on home interest would “financially squeeze many potential home buyers in areas with high housing costs”?
Housing costs aren’t high for no reason. Basic economics says that in areas of limited house supply (like much of Los Angeles) prices are based on what buyers are able to spend. If buyers cannot qualify for as much due to reduced mortgage deductibility, then house prices will have to go down (yes, even in L.A.).
The hidden conclusion is that mortgage deductibility helps home sellers, real estate agents, and banks, but not home buyers, by keeping prices higher than they would otherwise be.
DARRELL R. CLARKE
Santa Monica
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