How Would Reforming the Mortgage Interest Deduction Affect the Housing Market?

Margery Austin Turner, Eric Toder, Rolf Pendall, Claudia Ayanna Sharygin

Opponents of MID reform warn that reducing the deduction would undermine the value of owner-occupied homes and impede the recovery of the depressed housing market. The best available evidence predicts far less dire effects and suggests that some reforms could actually bolster the housing market recovery. However, the results are far from definitive. As debate continues, the Urban Institute plans to further explore behavioral and market changes, strengthening the evidence upon which policymakers can rely.

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