How gov't housing subsidies to too-rich Silicon Valleyeans make the market less affordable for everyone else
Image by Henri Gervex, CC BY-SA 4.0, via Wikimedia Commons
Jonathan Lansner of the Southern California News Group argues that "SALT" deductions (favored by both national parties, btw, that allow write-offs up to $40k/yr for property taxes) simply enable absurd housing prices.
So what could be amiss with such government generosity?
Well, it translates to another housing subsidy that further props up ridiculously high sale prices and further complicates a badly wounded real estate market. You see, various ownership incentives, promoted by both political parties over the decades at the local, state and federal levels, have made the housing market overly dependent on such subsidies.
These incentives range from the deductibility of mortgage interest to tax breaks on home sale profits to government cash infusions for down payments or other financial needs of home seekers. And don’t forget the Federal Reserve’s manipulation of the mortgage rate landscape.
Yes, “supporting” homeownership is a noble cause. Yes, these subsidies are typically offered with the best intentions. Consider the politically well-connected real estate groups that push them, too.
Still, sadly, tossing more money at the housing market only benefits the few who qualify – and makes house hunting a futile chase for the masses.
Consider that 65% of Americans owned their homes in 2025’s first quarter. That’s the smallest share since the end of 2019, just before coronavirus pandemic upended the economy.
After all that pandemic-era homebuying madness, including historically low mortgage rates, the ownership needle is stuck in neutral.
You see, the housing market is excessively stimulated. Take the rise in SALT tax deductibility.
It effectively gives house seekers greater financial capability to purchase a home because their property tax expense, post deduction, will be reduced. It’s much like how the ability to write off mortgage interest — within prescribed limits — gives borrowers enhanced purchasing power. Same for down-payment assistance programs.
And don’t get me started on how the Fed’s ill-fated pandemic-era slashing of mortgage rates – which included buying $1 trillion of mortgage bonds – distorted the housing market.
All of it creates more money chasing a limited stock of homes. And the true winners are home sellers who get premium, government-juiced pricing.
Equally troubling are “Bill Beautiful Bill” provisions that turbocharge tax breaks for real estate investors. This will create more competition for house hunters seeking a place of their own.
Read the whole thing here.
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