Change to Mortgage Interest Deduction Could Drop Home Prices By 15 Percent, NAR President Warns

This is a press release, so take it with a grain of salt. It sounds a little alarmist to me:

To: National and Business Desks, Political Reporter

Contact: Lucien Salvant of the National Association of Realtors(r), 202-383-1176 or lsalvant@realtors.org

SAN FRANCISCO, Oct. 28 /U.S. Newswire/ -- Home prices, particularly in high cost areas, could decline 15 percent if President Bush's tax reform panel's expected recommendation to convert the mortgage interest deduction (MID) to a tax credit gets implemented, said Al Mansell, president of the National Association of Realtors(r) (NAR).

Speaking at the opening session of the 2005 REALTORS(r) Conference & Expo here, Mansell said that if the MID were changed, the typical homeowner could lose $20,000 to $30,000 in housing equity.

"Housing is the engine that drives this economy and to even mention reducing the tax benefits of homeownership could endanger property values. The tax deductibility of interest paid on mortgages is both a powerful incentive for homeownership and one of the simplest provisions in the tax code. It should not be targeted for change," Mansell said. "NAR will continue to tell Congress that Realtors(r) strongly oppose any attempts to alter the current tax treatment of mortgage interest."

Eliminating the mortgage interest deduction would hurt middle-income families the most, he said. According to IRS tax return data from 2003, 52 percent of the families who claim the mortgage interest deduction have household incomes between $60,000 and $200,000.

More here.