In a survey conducted by the California Association of REALTORS®, home buyers cited price decreases (45 percent), the desire for a better location (12 percent), and favorable prices/financing (11 percent) as reasons for purchasing a home. Buyers also indicated that the mortgage interest deduction is important to them.
Findings from the California Association of REALTORS® "2012 Survey of California Home Buyers" indicate the mortgage interest deduction (MID) is extremely important to home buyers across all income levels and age groups, with 79 percent of all home buyers saying that the mortgage interest and property tax deductions are "extremely important" in their decision to purchase a home.
REALTORS® are being called to action at the national, state and local REALTOR® levels to contact their members of Congress and urge them to keep the mortgage interest deduction intact. There is much speculation that the once sacred cow of housing could be on the chopping board in order to avoid a "fiscal cliff."
Current law permits deductions of the interest paid on mortgage debt of up to $1 million on a primary residence and one additional residence. In addition, the interest paid on home equity loans of up to $100,000 may be deducted. Plans to reduce the MID by as much as $500,000 and/or limiting this benefit to a primary residence are being floated around in Congress.
"Congress, as part of negotiations on avoiding the 'fiscal cliff,' has made direct references to 'closing loopholes' and 'limiting deductions' as a way to raise revenues. We are asking our members to explain to their legislators that losing the mortgage interest deduction will disproportionately affect the middle class because a larger proportion of the middle class takes the deduction," explained Suzanne Yost, president of the Silicon Valley Association of REALTORS®.
According to the California Association of REALTORS®, in California, 89 percent of those who took the MID earned less than $200,000. Losing the deduction would cost the average California taxpayer over $3,900.
Additional findings from C.A.R.'s home buyer survey indicate home buyers are more optimistic about today's housing market. Of 800 home buyers statewide who closed escrow on their new homes within the six months prior to August 2012, majority said they believe home prices will continue to rise in the future. This finding echoes a jump in the consumer confidence index from 37.38 in January 2009 to 73.7 in November 2012.
Twenty-five percent of buyers surveyed believe prices will rise in one year, while 41 percent anticipate home prices will rise in five years. Nearly three-fourths of buyers (73 percent) believe home prices will rise in 10 years. This compares to only eight percent, 35 percent, and 60 percent, respectively, in 2009, when the question was first asked.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.