Seminar

The mortgage interest deduction and its impact on homeownership decisions

Presentation by Christian Hilber (London School of Economics & SERC) about the mortgage interest deduction and its impact on homeownership decisions.

Date
September 13, 2011
Time
00:00
Location
CPB, Van Stolkweg 14, The Hague

Time: 2011, Tuesday September 13, 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Christian Hilber (London School of Economics & SERC)

Discussant: Michiel van Leuvensteijn (CPB)

Language: English

Registration:  Please register by sending an email to seminars@cpb.nl.

Abstract subject:This paper examines the impact of the combined U.S. state and federal mortgage interest deduction (MID) on homeownership attainment, using data from 1984 to 2007 and exploiting variation in the subsidy across states, over time and due to inter-state moves. We test whether capitalization of the MID into house prices offsets the positive effect on homeownership. We find that the MID only boosts homeownership attainment of higher income households in less tightly regulated housing markets. In more restrictive places – typically larger coastal cities – an adverse effect exists. The MID is an ineffective policy to promote homeownership and improve social welfare.

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