Can I get an edit? It's actually metrosmartpasses.org. sorry for the confusion

delete this comment when done.

by Michael Perkins on Mar 17, 2011 12:44 pm  

Fixed.

by David Alpert on Mar 17, 2011 12:47 pm  

I'm not a particular fan of Ed Glaeser, but once in awhile he writes something I agree with... that pretty well summarises how I can be a small-government socialist; something I've been trying to put words to, myself.

by Bossi on Mar 17, 2011 1:16 pm  

The only steps Gray will be taking is when the FBI hauls him out of office in hand cuffs....can't wait. Oh, and Kwame will be along side of him as well.

by sick of 'em on Mar 17, 2011 1:24 pm  

Isn't the real problem with electronic passes that you can't get them anywhere. CVS doesn't seem on top of SmartTrip.

If I read that police report correctly, it basically said every car was in violation (or right at the line) of the law. Might I suggest a record of 100% lawbreaking suggests the law is bad?

by charlie on Mar 17, 2011 1:34 pm  

RE: Red Light Cameras
I for one am sick and tired of cars that will pull up and stop right on the crosswalk, blocking me as I cross the street. Then the driver looks at you and a) tries to ignore you, b) backs up (which they can only do if there isn't a car behind them), or c) they get mad at you (I mean, how dare I walk across the street at the time that they are busy going somewhere.) Blocking the crosswalk is a real problem and I'm glad that someone is addressing it.

@charlie
If the law is bad, then shouldn't the law be changed instead of attacking those trying to enforce it? A lot of people don't like the speed limit, but they use all that anger to attack polic enforcement and red-light cameras instead of trying to change the speed limit.

by dc denizen on Mar 17, 2011 1:42 pm  

It's a "stop bar" for a reason: that's where you stop. I'm willing to concede that some people may overrun the stop bar a bit, so I'm not fond of photo enforcement that triggers an inch past the stop bar; but when you have a minimum 4 ft before the crosswalk: that's plenty of distance for a licensed driver driving per roadway conditions to bring their vehicle safely to a halt.

My vote is in favor of cameras enforcing even an inch into the crosswalk... and I'll admit that I've inadvertently done that on occasion, and I rightly deserve a ticket for every single time I do it.

by Bossi on Mar 17, 2011 1:51 pm  

@DC Denizen; the issue with laws that are flouted is selective enforcement. Take drug cases -- who gets busted for possession.

Now a smart lawyer would say the law recognizes that which is why these are administrative hearings instead. Whatever. A fine is a fine.

While I agree with your statement on crosswalks, let me share a story. The crosswalk thing is probably the biggest thing I've learned as a driver while reading GGW. I am very conscious of that now. So much so, that last summer, during a rainstorm, I stopped at the line. I could not see because of the dark/rain, so I inched forward a bit more, made sure there was no traffic, and missed the cop across from me. She did seem far more interested in my failed inspection sticker than the actual violation -- but it goes back to the selective enforcement idea.

Best argument ever for criminal lawyers: your client is guilty, but not of what he was charged with.

by charlie on Mar 17, 2011 1:52 pm  

Charlie does raise a good point in that sometimes the stop bars are nigh invisible... sometimes the crosswalks are, too. I do belive that if there's photo enforcement: there's an obligation upon the government to ensure that all signing, markings, signal timings, etc. comply with applicable standards.

by Bossi on Mar 17, 2011 1:54 pm  

@Bossi; well, it was partially the night/rain, and mostly the placement; on small intersections (just off Key blvd) the stop line is placed so you can't see traffic to your left and right.

And let's be honest: MPD is mostly interested in cash -- and politicians some fat consulting contract from camera companies -- than traffic efficiency.

by charlie on Mar 17, 2011 1:59 pm  

If the mortgage interest tax deduction subsidizes owning suburban homes over renting urban ones, doesn't it also subsidize these?
1. owning urban homes over renting suburban ones.
2. owning urban homes over renting urban ones.
3. owning suburban homes over renting suburban ones.

by Miriam on Mar 17, 2011 1:59 pm  

On the red light cameras - while ticketing people who park in a crosswalk is interesting, it doesn't seem to be the same thing at all as ticketing people who run a red light. Running a red light is always in the driver's control. Many times you are driving along behind an SUV or delivery truck that you can't see around in heavy traffic, and then realize you need to stop right away, when you're into the crosswalk. That isn't something that should be handled by a machine. I would be fine if it were handled by a human cop who would be able to exercise discretion.

by Brian White on Mar 17, 2011 2:05 pm  

The Economist looked at the Glaeser article, too. In his words: "Pro-minority, pro-poor urbanism, as lovely as that sounds to my ear, sends all the wrong signals to the American-flag t-shirt crowd."

http://www.economist.com/blogs/democracyinamerica/2011/03/cities_and_right

by OctaviusIII on Mar 17, 2011 2:10 pm  

@charlie
That's just it, red-light cameras are not selective enforcement. That's what I think really makes critics angry about them. In the past drivers only had to deal with a physical person, a cop, who enforces selectively. But now they have to deal with a tool that catches them even when there is no one around. Take speeding, for example. It used to be that a cop would stop you, you pulled over, and he wrote the ticket while everyone speeds by, laughing that you got caught. People would even take pride in being able to evade the police. With red-light cameras this kind of evasion isn't possible (at least not that I know of) and drivers who could get away with speeding no longer can.

As for the markings, I agree, the city should make sure that if you are going to enforce an intersection there needs to be appropriate crosswalk markings, signs, etc. including a sign that says there is video/red-light camera enforcement at this intersection.

by dc denizen on Mar 17, 2011 2:10 pm  

"I'm not a particular fan of Ed Glaeser, but once in awhile he writes something I agree with... that pretty well summarises how I can be a small-government socialist;"

I have been thinking about these types of issues a lot lately. I would describe the position mainly as anti-federalist. It is not a left/right divide, nor even a libertarian/statist divide. My position is essentially libertarian at the national level, and more Democrat at the local level. National leaders invariably have more power and less accountability than local leaders, which is always a recipe for bad governance.

by Brian White on Mar 17, 2011 2:11 pm  

@Miriam

No kidding. You never hear these "urbanists" whine about how THEIR public transportation is heavily subsidized by gas taxes on drivers.

I take that back -- they do whine... about how they arent subsidized even more.

by TGEoA on Mar 17, 2011 2:12 pm  

@Miriam

If the mortgage interest tax deduction subsidizes owning suburban homes over renting urban ones, doesn't it also subsidize these?

Yes, it does - I don't see how that's relevant, however. Homeownership is biased towards single family structures. Owning a single unit in a multi-unit building is far more complex, hence it is much more rare (I think Glaeser has cited a figure for the US noting that only 10-15% of multi-unit buildings are owner-occupied). The mortgage interest deduction is therefore a huge giveaway to suburban interests.

Moreover, the MID isn't even that effective in promoting home ownership. Canada has no MID, yet they have a very high home ownership rate. The MID doesn't encourage ownership exactly, it encourages leverage and borrowing. In Canada, people buy a home to have a home, not as an investment. Most mortgages there are only 15 years long and paid off as soon as possible. The MID in the US only encourages large, leveraged, illiquid bets on the housing market.

It's a poor policy and it should be eliminated. The fact that it hurts cities is just one more reason to get rid of it.

by Alex B. on Mar 17, 2011 2:13 pm  

And let's be honest: MPD is mostly interested in cash -- and politicians some fat consulting contract from camera companies -- than traffic efficiency

You hear this quite often, but regardless of what MPD's motiviations are, you can bet the thousands of folks living in the city who are pedestrians (or cyclists, etc, etc...) who are clamoring for increased enforcement are in earnest.

There's a similar thing at work with the argument that "if no cars obey a law, clearly that law needs to be changed." You might have a point if there were no one else in our public spaces. But these laws are there to protect non-auto users--not to ensure that drivers can drive as fast as their car and the road conditions permit.

If every cyclist were to ride their bike at 30mph on the sidewalks where it's legal, we certainly wouldn't see that as evidence that that's the right speed.

by oboe on Mar 17, 2011 2:13 pm  

@Brian White
Maybe just giving out warnings via red-light is more appropriate than ticketing them. Sometimes I think that drivers are not aware that they are blocking the crosswalk, simply out of habit. I don't want the book being thrown at drivers, just change their behavior so they stop at the white bar so peds can cross appropriately.

by dc denizen on Mar 17, 2011 2:15 pm  

"doesn't it also subsidize ... owning urban homes over renting urban ones."

Yes :) Notice that the article is from the New York Times. New York City has a much much higher percentage of multi-family rental buildings than DC does. "More than 85 percent of dwellings with three or more units are rented, while more than 85 percent of single-family detached dwellings are owner-occupied." My area on the outskirts of Capitol Hill is all rowhouses. Huge swathes of upper NW look just like the suburbs. I think people in New York forget that living in your own rowhouse is a valid form of urban living.

by Brian White on Mar 17, 2011 2:16 pm  

Brian - I would argue that perhaps the person is driving too close to the SUV or delivery truck. My older brother and father (both coached me on driving way back in the day when I was learning) both stressed the importance of situational awareness. That is, not just blindly following the vehicle in front of you but being aware of what is going on several vehicles ahead.

We're also in a transition period where people are being trained by the cameras to change their behavior. There is always friction during these periods.

by Red Light Camera Lover on Mar 17, 2011 2:18 pm  

I think people in New York forget that living in your own rowhouse is a valid form of urban living.

Hahahahahahahahahahahahahahahahahaha.

No. Seriously. It's becoming less and less possible to actually own a (modestly sized) family-sized home in a major city.

by andrew on Mar 17, 2011 2:51 pm  

It looks like these traffic "problem spots" may be well-founded. This came in over my neighborhood listserv today:

Good Afternoon,

The First District recently detailed an officer to specifically address traffic violators in the Kingman Park Area. The citizens in the community made us aware of some issues with speeding and stop sign violations. During the last two weeks, the officer wrote 124 moving violations, which totaled $15,985 in fines. All of these infractions occurred in the Kingman Park neighborhood.

Thanks,

Lieutenant Mark Saunders
First District Sub-Station (PSA 103)
500 E Street, S.E.

by andrew on Mar 17, 2011 2:53 pm  

I don't see why promoting homeownership is such a bad thing -- even if it's condominium (or co-op) ownership there are benefits to the community to having homeowners living in a neighborhood.

You only need to look at last week's discussion of the Gtown slumlords/student ghetto to see that having an ownership stake in the community is a good thing that can be promoted.

Yes MID helps people in the suburbs but it helps owners in the cities who have an an even higher cost of housing.

by CBGB on Mar 17, 2011 2:54 pm  

@AlexB: Homeownership is biased towards single family structures. Owning a single unit in a multi-unit building is far more complex, hence it is much more rare

This may or may not be true in the US -- as Brian White says, there is urban living that is not multi-unit tall buildings. (Unless you want to define "urban" as "multi-unit tall buildings".) But I don't think there's anything inherent about it. What are the homeownership rates in (for example) London, Paris, or Tokyo, and what percent of that is single family houses?

The mortgage interest tax deduction is indeed poor policy because it encourages rich people to take out big mortgages. But this would only be anti-urban poor policy if it were difficult to find expensive housing for sale in urban areas. Which it isn't, in many urban areas, and especially not in Manhattan.

by Miriam on Mar 17, 2011 3:10 pm  

@Miriam

The height of the building is irrelevant. The only thing that matters is the number of owners. A rowhouse with an English Basement that's been condo-ized is still a very complex ownership situation. Who pays for common assets, like the roof? Ergo, these kinds of structures (whether they are duplexes or 250 unit high rise towers) are overwhelmingly 'urban' and overwhelmingly rentals.

No, there's nothing inherent about it - there's no rule that you can't convert that type of housing into ownership. What is inherent about the condo is that the ownership structure is necessarily more complex. More complexity means a higher barrier to entry in that market - establishing a communal ownership structure has costs, and those costs are often not worth it - ergo, places that have more apartments and multi-unit buildings do not have the same level of home ownership.

This isn't really disputed by anyone, the facts are quite obvious. The added costs of condo-ization mean that the cost of owning (relative to the cost of renting) is much higher in urban areas.

But this would only be anti-urban poor policy if it were difficult to find expensive housing for sale in urban areas. Which it isn't, in many urban areas, and especially not in Manhattan.

I'm not sure what you're trying to say here.

The policy is anti-urban because if I have a set budget to spend on housing, my options in an urban area are likely to be all rentals - a) because rentals are more common than condos in cities, and b) because the added costs of condoization will skew urban ownership options towards more expensive price points. In a suburban area, I'd have ownership options on that same budget that also give me the benefit of a big break on my taxes.

by Alex B. on Mar 17, 2011 3:22 pm  

@Alex B-

I don't quite agree with saying that condos are more expensive because of condo fees... when everyone in a building is sharing in the maintenance costs, the per-person costs of maintenance should go down as compared to a single owner.

Rather, I think the higher prices is more a result of market forces given that higher densities tend to be in areas with higher land values as to justify constructing the higher densities.

by Bossi on Mar 17, 2011 3:46 pm  

Interesting metric MPD is tracking. While I don't think the cash/extortion demands are the fault of the police alone, it is telling how much they focus on it.

@dcdenzien; good point about the cameras but you're still selective if you're just hitting one neighborhood or intersection. Issuing warnings -- or giving people a hall pass for a certain number of violations -- has some appeal. But you're ignoring the other factor driving traffic cameras -- companies. They install them and take a cut of the ticket. Very little interest on their part of having an alternative system.

I think it's important to remember when trying to alter driver behavior -- or any behavior -- that there isn't just one tool. Traffic cameras have their place at times. Fines, enforcement do as well. Education, placement of signals, and do as well.

Part of the reluctance to enforce, is probably the old monster of "traffic tickets mean free money from maryland commuters"; I suspect in the neighborhoods there are a lot of DC residents that are going to complain about increased enforcement.

by charlie on Mar 17, 2011 3:58 pm  

@Bossi,

I'm not saying that condos are more expensive because of the fees - the fees are only part of the complexity.

The entire process of setting up a condo and dividing the ownership is a rather long and arduous one. It's not simple - certainly not nearly as simple as buying or selling a single family home fee simple absolute.

I'd also note that to get an apples to apples comparison - the money you save for maintenance with a condo doesn't really apply here, since you would also save that money in an apartment as well. That's a savings that's intrinsic to the building type, not necessarily to the ownership structure.

My point is simple - the costs involved to set up a condo ownership structure are higher than the costs of setting up a fee simple ownership for a single family home. For the longest time, it was never worth it to do so, therefore it wasn't often done - and thus 85% of our urban, multi-unit buildings are occupied by renters instead of owners.

by Alex B. on Mar 17, 2011 3:58 pm  

@AlexB: This isn't really disputed by anyone, the facts are quite obvious. The added costs of condo-ization mean that the cost of owning (relative to the cost of renting) is much higher in urban areas.

How are the added costs of condo-ization relevant to the price of urban housing that does not need to be condo-ized? And are you saying that there are more rentals than condos in cities because condos cost more in cities because there are more rentals than condos in cities? (All cities? Just US cities?)

If the inherent higher cost of ownership relative to renting in urban areas, either just in the US or everywhere, is quite obvious and not in dispute by anyone, there should be lots of data to prove the point. This isn't my field, so I don't have the data. Is there somebody who does?

by Miriam on Mar 17, 2011 3:59 pm  

I think maybe there is common cause between urbanists and more intellectual libertarians (who happen not to be politicians) on the issue of the mortgage interest deduction. However, I don't think this will translate into the real world. People like the MID, particularly those in the suburbs. Politicians don't want to upset people in the suburbs. The net effect of getting rid of the MID (assuming you lower federal taxes so it's revenue neutral) is that homeowners will pay slightly more, and renters in the city will pay slightly less. So you have the Tea Party (which is mainly suburban and rural) advocating for higher taxes on themselves. Since the one unifying theme of the Tea Party is that they think they pay too much in taxes, I don't see this happening.

I'd also argue that the Tea Party really isn't a libertarian movement as much as it is general dissatisfaction with the government and socialized medicine (but medicare is ok)

by Steven Yates on Mar 17, 2011 4:08 pm  

"It's becoming less and less possible to actually own a (modestly sized) family-sized home in a major city."

About 40% of DC residents own their homes. About 30% of NYC residents own their home (as reported by Census home ownership rates from 2000). Why is it becoming less possible? My whole area of town is rowhouses, with just a few relatively small (maybe 6 floor) apartment buildings.

by Brian White on Mar 17, 2011 4:13 pm  

RE: Station Overlay Districts

I'm confused about this item. This bill was actually killed on Monday. And while the bill title sounds nice and its supporter sold it as a way to encourage smart growth, it was actually a developer's attempt to bypass local planning agencies and squelch community participation in the development process.

by Stanton Park on Mar 17, 2011 4:55 pm  

The only bias the mortgage deduction creates is towards ownership over renting. The fact that people among people who wish to own prefer to own houses over condos is the reason why most owner-occupied housing is a single-family home over a multi-unit dwelling, not the MID.

by ah on Mar 17, 2011 4:57 pm  

@Brian White -- Have you looked at what those single family row houses are selling for? A great many people with good professional jobs are priced out of that market completely.

The "workforce housing" at Captiol Quarter is open to people with incomes between something liek $84K to $119K. Those are the subsized units.

It's buy a small condo or move to the suburbs, if you didn't get into the market years and aren't rich.

That inflated market is direct result of the mortage insterest tax deduction and lending policies activly encouraged by the federal government.

by Kate on Mar 17, 2011 5:07 pm  

@Miriam

How are the added costs of condo-ization relevant to the price of urban housing that does not need to be condo-ized? And are you saying that there are more rentals than condos in cities because condos cost more in cities because there are more rentals than condos in cities? (All cities? Just US cities?)

No, that's not what I'm saying at all.

Cities are dense. They have more multi-unit buildings. Multi unit buildings tend to be rentals, because condo ownership is complex. Ergo, there are more rentals in cities than owner-occupied units.

If the inherent higher cost of ownership relative to renting in urban areas, either just in the US or everywhere, is quite obvious and not in dispute by anyone, there should be lots of data to prove the point. This isn't my field, so I don't have the data. Is there somebody who does?

Ed Glaeser does. I'd recommend his recent book, "Triumph of the city."

The basic point is this - cities don't have high rates of home ownership - even the very wealthy parts have lower rates than suburban areas of similar wealth. This is because ownership in a city is inherently more complex due to the density and common space required for condo-type ownership.

@Brian White

A rowhouse is a single-family house. You own one fee simple. They are not (usually) condos. Granted, it's probably the densest type of single family house we have, but it's still a single unit structure.

There are so many reasons to kill the MID. It's horrible policy. It does not promote home ownership, it promotes overly leveraged home purchases. It's a massive tax give-away to owners, particularly wealthy owners who have large amounts of outstanding mortgage interest.

One positive thing that came out of the Deficit Reduction Task Force was the recommendation to finally kill this policy. I would hope that this time of austerity might actually provide enough cover to kill this bad policy (or structure a phase-out).

by Alex B. on Mar 17, 2011 5:12 pm  

@Alex B. This is because ownership in a city is inherently more complex due to the density and common space required for condo-type ownership.

You keep saying that. But how do you know that it's true? I.e., that ownership of a unit of multi-unit housing is more complicated than ownership of something that isn't a unit of multi-unit housing.

And how do you know, if it's true, that the reasons for lower ownership rates in urban areas compared to suburban areas are that potential owners are deterred by the complicatedness of owning a unit of multi-unit housing and/or that prices of these units are higher because it's more complicated to buy/sell them?

I am perfectly happy to agree to the statement that the mortgage interest tax deduction subsidizes ownership over renting, and that, because ownership rates in suburban areas are higher, the benefits of the mortgage interest tax deduction disproportionately go to suburbs.

(But not all suburbs equally. If you don't have a big giant mortgage, it doesn't necessarily make sense to itemize. Another thing there ought to be data on is the percentage and income of people with home mortgages who take the standard deduction.)

by Miriam on Mar 17, 2011 5:40 pm  

@Miriam

I think this is where the confusion is - I'm not saying ownership in the city is more complex for the home owner - I'm saying merely creating that unit of ownership is a far more complex process. I'm speaking broadly about the very concept of home ownership, not the act of an individual owning a home or condo.

Owning is not the complicated part. The only real difference is the condo fee for the owner. Making ownership available is the complicated part.

Have you ever gone through a condo conversion? Converting a duplex or an apartment building to a condominium? It's a very complex and tedious process. It's complicated - lots of legal filings, inspections, work for the lawyers, and whatnot. You are, after all, in effect taking what was once a single property and chopping it up into lots of small ones - except, that you're only selling the interior portions of the structure, not the common areas or the exterior of the structure, etc - so you need to set up some common entity to control that, etc.

Often, it's not worth the hassle - therefore, the supply of potential owner-occupied units is far lower than in the suburbs, because the market share of single-family homes is far lower in cities than in suburbs.

Condo-ization made a lot more sense when home prices were booming - a developer could get a lot of capital from selling those units, therefore they were willing to take on the costs. Likewise, it's easier to do this with new construction, when you're starting from scratch.

Nevertheless, there is no doubt that the entire system is a much more complex form of ownership than fee simple absolute.

by Alex B. on Mar 17, 2011 5:49 pm  

So what you're saying is, it's complicated to convert the rentals into condos, so the sale price of the condo has to be pretty high to make the condo conversion worthwhile, so if it isn't high enough, the rentals will stay (comparatively cheaper) rentals. Right?

I don't have any problem with that.

But, while that describes some parts of DC in the last 10 years or so, it doesn't describe all parts of all cities at all times.

In which case there must be other reasons why ownership rates are lower in cities than in suburbs (if they are, which may not be equally true everywhere).

The mortgage interest tax deduction benefits rich people with big mortgages, regardless of where they live. This is quite obvious and not in dispute by anyone. :-)

by Miriam on Mar 17, 2011 6:22 pm  

@Alex B -I own both a condo and a SFH. I assure you the condo is not at all more complicated to own than the house. In many ways its less complicated. Sure, maybe 30 years ago when the bldg "went condo" there was a lot of planning invloved, but I wasn't there for that. In any case its not prohibitively complicated for a bldg to go condo. Human beings are clever animals. We do this sort of thing all the time. (not me. Others. I'm not that clever.) I absolutely do not pay more in condo association fees than I would were I paying singly for all those things the fee covers (water, insurance, taxes, heat, maintainance). I'm fortunate that my bldg is well managed and has been for years. That makes a difference.

Regarding the MID, I think it makes sense to keep it in place for the first year following a purchase since thats when all your cash gets drained. Thereafter I'm sympathetic to the arguments for getting rid of it eventhough i personally really like it a lot.

Owning (even a condo over a SFH) confers stability that renting can never confer. I know people who have rented the same house or apartment for 20 years and then the owner decides to sell or make some other change. When you own it, its easier to predict whats going to happen in the future and plan for your living situation. Plus you don't need permission for every change you want to make. There's a lot of freedom in owning. Yes i know the freedom in renting too (e.g. one month and you can be gone). So far I have been an owner 1/3 of my adult life.

by done both on Mar 17, 2011 6:23 pm  

Trying to make common cause with teabaggers,much like doing it with liberatrians (with who they overlap) is a waste of time. They lack real pragmatism and basically just have their own agenda of cutting taxes for the rich and neglecting public services, hardly an urbanist agenda.

by Rich on Mar 17, 2011 8:19 pm  

@Miriam

But, while that describes some parts of DC in the last 10 years or so, it doesn't describe all parts of all cities at all times.

In which case there must be other reasons why ownership rates are lower in cities than in suburbs (if they are, which may not be equally true everywhere).

Yes, homeownership rates in cities are lower than suburbs almost universally. Whether it's equally true or not doesn't disprove the trend, however - some cities have higher rates than others, but cities in general are still far lower than suburbs, in general.

The reason is obvious, as I've been trying to say. Ownership of multi-unit buildings is simply more complicated to set up, therefore it's not often done. Cities are denser than their suburbs, and that density means more multi-unit buildings. The data supports this fact.

This means that there's fewer for-sale opportunities in cities than in the suburbs.

I don't see what's in dispute here. The MID is a huge give-away for highly leveraged home mortgages, and those are far more common in suburbia than they are in urban areas, due to the physical attributes of a city. Ergo, the MID is a subsidy that works against cities.

@done both

I own both a condo and a SFH. I assure you the condo is not at all more complicated to own than the house. In many ways its less complicated. Sure, maybe 30 years ago when the bldg "went condo" there was a lot of planning invloved, but I wasn't there for that.

Again, the personal experience of owning isn't really relevant here. It also doesn't matter that you weren't present for the creation of the condo - somebody was there to do the conversion, and that person had to incur the costs. Someone always has to incur those costs, and if it doesn't make sense to do so (as it often does not in cities), then it doesn't get done. The data bears this out - the percentage of owner-occupied units in denser areas is far lower than in less dense areas (i.e. suburbs).

Please note, I'm not arguing against home ownership. I think it's great for all the reasons you list - stability, investment, control, etc.

I am saying that the MID is a poor policy to promote home ownership. Canada has no MID, yet they have an almost exactly similar ownership rate compared to the US. You're unlikely to find a nation as similar to the US in both urban form and general demographics as Canada.

The argument that we need the MID in order to promote home ownership is false. We need to kill that argument.

by Alex B. on Mar 18, 2011 10:21 am  

Eliminating the Mortgage interest deduction will be a boon to longtime homeowners everywhere. Most people having this discussion miss the fundamental mathematics associated with mortgage interest calculation. The mortgage interest deduction's effect on tax avoidance disappears the more years you live in the house, however, a flat tax rate would be steady. If congress calculates the new tax rates based on the 1st year deduction rate, then it's like getting the first year's MID forever, something that doesn't happen today.

by eb on Mar 18, 2011 11:11 am  

@eb-elimination of the MID will have less tax consequence for long-term owners for the reasons you state. However, the MID is likely to make owning homes less attractive and less affordable, which will put (further) downward pressure on house prices. That is of far greater consequence (i.e., that new home buyers will see a 20-30% increase in the effective monthly mortgage payment, thereby reducing their purchasing power) to almost all homeowners than the reduction in taxes.

The best way to avoid that significant disruption is to phase out the MID over time--e.g., 10% less interest is deductible for each of the next ten years (i.e., in year 2 you can deduct 80% of your mortgage interest).

by ah on Mar 18, 2011 11:45 am