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Opinion Editorials

Could killing mortgage deductions kill residential real estate?

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It’s not news that the real estate industry has struggled for the past few years. There are hints at a potential recovery as economic indicators point to our bouncing at the bottom, but could something as simple as killing mortgage deductions wipe out the real estate sector?

While sales and prices struggle along, there are a few things holding the real estate world together, most of them tied directly to politics. Rumors of cutting the mortgage deduction roamed the halls of Congress, the internet and news rooms but wasn’t validated until the deficit reduction plan was released today. The plan includes taking a giant machete to mortgage interest deduction for homeowners.

As with all lame duck Congressional sessions, the following weeks will be spent wearily mulling over issues halfheartedly, including major issues du jour like healthcare and the tax code. Critics and supporters are very vocal on the issue of mortgage interest deductions remaining in tact, and why not? How many tax credits can you count that nearly all middle-income earners can count on? That’s right, pretty much only two- mortgage interest deduction and child tax credits.

When everything looked good economically, most people wouldn’t have batted an eye at doing their part by sacrificing tax credits, but when employment is walking on broken ankles without crutches and the home prices and sales are huffing and puffing like Ralphie May taking a break from a marathon, killing mortgage deductions could be the straw that breaks the real estate camel’s back.

Who wins- the rich or the middle class?

“It’s been in the tax code for almost 100 years and it should stay there. Now is not the time to tamper with this,” said the National Association of Realtors’ managing director, Lucien Salvant.

This isn’t a tax deduction that rewards the rich, it’s currently capped at a million bucks anyhow. One of the considerations right now is moving the cap down to $500k. I will acknowledge that the flip side of the argument is that subsidies promote borrowers taking on more debt, but that’s ludicrous in my opinion and here’s why…

I’m going to get a check from Uncle Sam this year because I replaced a few appliances. I didn’t go out and buy new Energy Star appliances because there was a check from Uncle Sam involved, I bought them because the old ones were pieces of crap, but hey, thanks for the check, America. This isn’t how it should work.

The bottom line is that it is my belief that killing mortgage interest deductions is a back door tax and you can hire a sexy PR team to gussy it up and call it whatever you want, but at the end of the day, it’s money out of peoples’ pockets that are barely hanging on right now.

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32 Comments

32 Comments

  1. Kim Hannemann

    November 15, 2010 at 5:59 pm

    It’s not exactly “the President’s” plan – it’s a commission’s report. He hasn’t endorsed it as far as I know.

    • Lani Rosales

      November 15, 2010 at 9:02 pm

      You’re right. Good catch, I misspoke 🙂

  2. Todd Carpenter

    November 15, 2010 at 6:14 pm

    Hi Lani,

    While there was an initial draft of the plan released last week, as covered by the New York Times, it needs to be said that an initial draft is not the same thing as the actual plan being released. The report could change many times before the report is actually released. And 14 of the commission’s 18 members must agree on the recommendations before they can be released. We believe it’s unlikely that the sitting congress will involved in the outcome of whatever plan is eventually released.

    NAR is actively engaged on behalf of Realtors® and the nation’s home owners to ensure that the current MID is not changed – the tax deductibility of interest paid on mortgages is both a powerful incentive for home ownership and one of the simplest provisions in the tax code.

  3. Ruthmarie Hicks

    November 15, 2010 at 10:12 pm

    The initial proposal was to keep the top rate of the deduction to 28% and not at the top marginal rate. At least that’s what I could find Although I tend to work with more entry level types….this geographic area is noted for its high income families. Trust me, they have it to burn. This is wealth that the wealthiest of Westchester never dreamed of back in the 70s and 80s. It’s beyond ridiculous and a lot of them earned it was earned on Wall Street while everyone else was losing their shirts. They are still raking it in with both arms with bonuses flying around like crazy – while everyone else is being forced out of the area. It may cost them a bit more than they would like; I’m sure they’ll scream and yell and bewail the injustice of it all – but it won’t stop them from buying whatever they want. Such a proposal would bring in badly needed revenue – but wouldn’t make so much as a dent in wallets of that size.

    Now , to extend that to the general middle class – which came up in the committee proposal – that would definitely kill what is left of the “regular housing market” in my area. It would completely obliterate what’s left of the middle class around here. Property taxes are sky high and several property tax rebates that many of the middle class counted on have been taken away. People count heavily on the mortgage interest deduction. But I rather doubt that this will get the presidential seal of approval. Political suicide for just about anyone.

  4. Coleen DeGroff

    November 16, 2010 at 9:28 am

    Of course killing mortgage interest deductions will decimate residential real estate investment. Fact is, though, that we have a ginormous deficit, which Americans insist they want reduced. Our government is beholden to corporations and the richest members of our society. Doesn’t anyone else find it interesting that those two groups! Who hold most of the money in our country, are the only two groups not asked to give anything up under the Simpson-Bowles deficit reduction plan? If we want to keep tax cuts for the rich in place, if we want Wall Street tycoons to keep their ginormous bonuses (set to increase another 5 percent this year), if we want to ensure that corporations are continually rewarded financially for shipping jobs overseas, if we want to keep funding three endless wars…..somebody has got to pay for these things. And that “somebody” is, and will continue to be, the ever-shrinking middle class.

  5. Sondra Wissner

    November 16, 2010 at 1:47 pm

    It has become difficult enough in Stanislaus County with all the foreclosures and high unemployment. I guess this is another “Fleecing of America” plan. Why buy a house anymore? That is what our buyers are going to say to us. With the write-off being taken away what will the incentive to purchase? When will it end…..

  6. Charlie Elwis

    November 16, 2010 at 3:58 pm

    Eliminating the mortgage interest deduction immediately would, of course, be disasterous. However, we do need to look at whether rewarding people for having incurred debt is in our long-term national interest. I favor a graduated phase out of all debt-based deductions along with a reduction in tax rates. A graduated flat tax may be too much to hope for, but it is a worthwhile goal. Interest from savings should be tax free in order to direct America towards a path towards financial independence.

  7. Sam Ferreri

    November 16, 2010 at 6:58 pm

    The mortgage deduction is a good incentive for buying a house, but by far not the most pressing one. Owning a home has (and always will be) the American Dream. And the settled feeling you get in your own home will never be tied only to how much income tax you save. While I enjoy my own mortgage deduction, I would still own a home without it. Be clear, however, that I support NAR and the initiative to save the deduction!

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Opinion Editorials

New USPS duck-shaped truck design has mixed reactions

(OPINION / EDITORIAL) The USPS is getting a fleet of electronic delivery vehicles. We’re wondering if the actual design got lost in the mail.

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New USPS truck in a fictional neighborhood delivering mail.

So the USPS is getting new trucks and they look like ducks and maybe that sucks… or maybe it wucks. Like “works,” if a duck said it. Just give me this one please.

Anyway.

I don’t know how mean I can be here – there has to be something said for objective journalistic integrity – but I have a feeling most people are going to have a rather sarcastic reaction to the new design. I’m not so sure I can blame them – it has a kind of stubby little nose with a shortened hood and a boxy frame and super tall windshield, which gives the wheels a disproportionately large look compared to the rest of the silhouette. It’s sort of like a Nissan Cube but less millennial cool, which A) is discontinued (so maybe not so cool), and B) is not the car that had those giant hiphop hamsters running around, but I’m still going to link to it anyway.

Elon Musk must be breathing a sigh of relief right now.

The contract was awarded to Oshkosh Defense (which I was thrilled to find out is NOT the adorable kid’s clothing company, even though I personally think that would be hilarious if there was a factory making overalls for tiny humans alongside tactical defense trucks) and officially announced on February 23rd, 2021 to the tune of $482 million. Seriously though, someone is going to mix those up for the rest of all time and eternity; I’d never not think about my own baby pictures if some contractor from Oshkosh Defense showed up.

The release mentions that, “The historic investment is part of a soon-to-be-released plan the Postal Service has developed to transform its financial performance and customer service over the next 10 years through significant investments in people, technology and infrastructure as it seeks to become the preferred delivery service provider for the American public.” It’s called the NGDV – Next Generation Delivery Vehicle, which I happen to adore, and will pronounce as Nugduv, and you can’t stop me anyway. The old one was called the Grumman, by the way.

Some credit this as a radical change, and keeping in mind that radical doesn’t necessarily denote positive or negative, it seems like the perfect word to use here. Then there are those who correctly identify “a mixed bag of responses,” sort of like when you get a bag of candy at Halloween that has at least one thing no one likes. Some call it strange, while others defend it as something every new big vehicle should look like (this is where – as one of many – I found it called a “duck” which oh man do I love, quack quack).

We can also hit up the ever fair public opinion of Twitter, because why wouldn’t we?

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This is how I would draw a car. That is not a plus for this design

I really can’t get over that last one. But I mean, whoa. That’s quite the spectrum. There’s less disagreement on pizza toppings I think. But luckily I think we’re safe there – Domino’s makes people drive their personal cars.

Taking a step back and putting snide commentary away for a moment, there’s some areas that should be discussed. First – and what should probably be obvious – there was a laundry list of requirements and restrictions from the USPS, which made Nir Kahn – design director from custom carmaker Plasan – offer up his own tweets that give some insight on dimensions and design:

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I was involved in an early proposal for the USPS truck so I know the requirements well. They pretty much dictated the proportions – this package sketch shows that to meet the ergonomic and size requirements, there wasn’t much freedom 1/2 #USPS pic.twitter.com/Fk35g98Z83

Kahn mentions that “there wasn’t much freedom,” but also that “it could have looked much better,” and this sort of underlines the entire discussion I think – there were goals in place, and possibly some more aesthetically pleasing ways to meet them, but the constraints won out and drove (hehe) the design more than style did.

Certainly, there are other concerns – the ability for USPS drivers to reach a mailbox while seated is paramount. Others have pointed out that this design – with its large windshield and shortened front – should help with safety around small children (all the better if they are wearing Oshkosh B’gosh, because that implies they are tiny and may not be at all concerned with the dangers of streets). The open field-of-vision will aid in making sure drivers can navigate places that might be frequented by any number of pedestrians, so that’s a plus.

Further, if you get struck by one of these, you’ll basically “just” get kneecapped versus taking it square to the torso. The duck article is the one making this call, and I think there’s some merit there (though it makes me question how the USPS fleet is going to do against the SUVs and big trucks out in the wild). It then goes on to point out that this design has more cargo space, fitting into the idea of “rightsizing,” where the form and function of the vehicle meet in a way that is downsized, but still punches above its weight.

“From smaller fire engines to nimbler garbage trucks, making vehicles better scaled to urban tasks can make a huge difference, not only for keeping other cars moving on narrow streets, but also to ensure that humans on those same streets can access the bike lanes, sidewalks, and curb cuts they need to get around.”

I didn’t try too hard to find stats on crashes in mail trucks, but seems like something that should be addressed.

Maybe the biggest point here is that we sort of have to get new trucks – they are outliving their 24 year expectancy and catching on fire. On FIRE. I mean a mail truck might be the worst place for a fire. I’m not even sure I can’t think up a better answer… Ok maybe toilets would be worse.

The new vehicles can be either petrol or electric powered, have 360 cameras, airbags, and automatic braking. Oh, and air conditioning, which the old vehicles did not have. So yes, literally the worst place to have a fire. But due to the taller vehicles, someone can stand in them now! So escape is even easier! Hooray!

A series of delays pushed back the introduction of new vehicles from their 2018 projected date, with poor initial prototypes and the pandemic being major setbacks. Aggressive bidding led to extended deadlines, which had been narrowed down to a small list of candidates that included Workhorse (who unfortunately suffered a large stock plunge following the announcement). It’s been in the works for at least six years.

In the end, I don’t think we can discount all the advantages here – more efficient vehicles that are safer and provide drivers with modern amenities. That’s a LOT of good. I think once the initial goofy shock is over, the design will be accepted. Everyone thought Nintendo’s Wii was a hilarious name (still pretty much is regardless of being in the public book of acceptable nomenclature), and Cybertruck sales are brisk, so I think we can set a lot of this aside. The Edsel these are not.

So hey, new USPS vehicles in 2023, like an exceedingly late birthday present. All I want to see is a bunch of baby ducks following one of them around oh please let that happen. The USPS kind of has an identity crisis in the modern era, so maybe a funny little cute silly boxmobile is just the right way to get some attention.

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Opinion Editorials

Declutter your quarantine workspace (and brain)

(EDITORIAL) Can’t focus? Decluttering your workspace can help you increase productivity, save money, and reduce stress.

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decluttering

It’s safe to say that we’ve all been spending a lot more time in our homes these last few months. This leads us to fixate on the things we didn’t have time for before – like a loose doorknob, or an un-alphabetized bookshelf, or that we’ve put off ‘declutter’ on our to-do list for too long.

The same goes for our workspaces. Many of us have had to designate a spot at home to use for work purposes. For those of you who still need to remain on-site, you’ve likely been too busy to focus on your surroundings.

Cleaning and organizing your workspace every so often is important, regardless of the state of the world, and with so much out of our control right now, this is one of the few things we can control.

Whether you’re working from a home office or an on-site office, take some time for quarantine decluttering. According to The Washington Post, taking time to declutter can increase your productivity, lower stress, and save money (I don’t know about you, but just reading those 3 things makes me feel better already).

Clutter can cause us to feel overwhelmed and make us feel a bit frazzled. Having an office space filled with piles of paper containing irrelevant memos from five years ago or 50 different types of pens, has got to go – recycle that mess and reduce your stress. The same goes with clearing files from your computer; everything will run faster.

Speaking of running faster, decluttering and creating a cleaner workspace will also help you be more efficient and productive. Build this habit by starting small: try tidying up a bit at the end of every workday, setting yourself up for a ready-to-roll morning.

Cleaning also helps you take stock of stuff that you have so that you don’t end up buying more of it. Create a designated spot for your tools and supplies so that they’re more visible – this way, you’ll always know what you have and what needs to be replenished. This will help you stop buying more of the same product that you already have and save you money.

So, if you’ve been looking to improve your focus and clearing a little bit of that ‘quarantine brain’, start by getting your workspace in order. You’ll be amazed at how good it feels to declutter and be “out with the old”; you may even be inspired to do the same for your whole house. Regardless, doing this consistently will create a positive shift in your life, increasing productivity, reducing stress, and saving you money.

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Opinion Editorials

Online dating is evolving and maybe networking will too

(OPINION EDITORIALS) How has the online dating industry been disrupted during the pandemic? And can we apply a few pointers from this evolved model to networking?

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Woman networking through Zoom video call with two other women.

We are often reminded that hindsight is 20/20 – a proverb that means “it is easy to understand something after it has already happened”, and how ironic that is since we are in the year 2020 and not sure we can fully comprehend all we are learning and what hindsight this will bring.

Reflecting back to six months ago, there were many of us that didn’t have much of a clue about what the rest of 2020 would look like and how we would have to adjust to a more virtual world. We’ve updated our ways of working, connecting with colleagues, socializing with friends, networking with those in our industry, or looking for a new job.

Microsoft suggested that we have seen two years’ worth of digital transformation in about five months. For example: MS Teams, Zoom, and Google Meet have become the new way to host networking sessions, work meetings, and “chats” with colleagues; Tele-med appointments became the norm for routine or non-911 emergency doctor appointments; curbside pickup at grocery stores and food to-go orders via online ordering became the new normal (they existed before but saw tremendous growth in number of users).

We also had to learn how to create engaging and interactive ways to connect solely through a screen. We are already Zoom fatigued and wondering how online meetings have zapped our energy so differently than in person. It turns out, looking at ourselves and trying to talk to a group is a lot for our brains to process.

The Atlantic shares a great article about why the Zoom social life might feel so draining, saying that “Attempting to translate your old social habits to Zoom or FaceTime is like going vegetarian and proceeding to glumly eat a diet of just tofurkey”. No offense to vegetarians, of course.

You could argue though, that we’ve all been interacting via screens for years with the dominance of social media channels – whether it was posting our thoughts in 140 characters on Twitter, or sharing photos and videos of our artisanal sandwiches/cute kid/pet pictures on Facebook. But this seems different. Times are different and we will not be going back soon.

In this interim, many people are trying to make the best of the situation and are figuring out ways to connect. We will always need human connection (and without the germs, even better).

What about our single friends? If they don’t have anyone in the house to already drive them crazy, then where can they go to meet new people and/or possibly love interests?

While many experts are trying to predict the outcomes of this global shift, it may be hard to know what will change permanently. We know many industries are experiencing major disruptions – online dating apps being one of them.

According to Digital Trends, Tinder still ranks as one of the top dating apps. However, now that people are sheltering in place and/or social distancing, there’s a new app taking over as a way to “meet” someone a little faster, while also allowing you to stay behind the screen, sans mask.

Slide is a video dating app that changes your first-date frustrations into real connections and instant chemistry. Explore video profiles, go on first dates via Video Calls at your fingertips, and find that chemistry before dating IRL.”

So, while Tinder, Bumble, and Hinge play quarantine catch-up, Slide is stealing their market share.

How? With video.

Slide recognized the massive success of short-form video platforms like TikTok, and have translated it to dating. They focus on features like:

  • “Vibe Check”, which gives you the option to video chat immediately after matching with someone to see if there’s chemistry. This will save you from long or misinterpreted text conversations and money you may have spent on that first date.
  • A video-first approach that lets you see the real people behind the profiles so you can pass if they aren’t really who they say they are.
  • AI-assisted creation of “future bae” profiles that help suggest your best matches and spare you extra swipes. If Netflix can find similar suggestions…

As of August 2020, the Department of Labor and Statistics estimates about 13.6 million people are currently unemployed and searching for a new j-o-b. Is it possible that some of these newer ways of connecting online could be included in how we network for a new job/career opportunity?

For example, instead of sending a connection or networking request on LinkedIn, what if we could send a quick video about our story, or what we’d love to learn from that person, or how we’d like to connect?

Would that create a faster, better, possibly more genuine connection?

This would seem worth exploring as many job connections are created by in-person networking or reaching real people vs. solely online applications, behind a screen. Some other formats that have seen increased use are Marco Polo for video chats (you don’t have to both be available at the same time) and FaceTime group calls.

It might be worth exploring how short-form video platforms could assist job seekers in networking, outreach, and connecting with others. These are just some ideas as we continue to watch this digital transformation unfold.

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