[quote=briansd1]FormerSanDiegan, you make an interesting observation.

But I also disagree on your assessment of the higher end.

Essentially, you’re saying that the “ownership premium” will increase and people will turn to renting.

We know that higher end is biased toward ownership and there are fewer rental substitutes at the higher end.

During the peak people were not deterred from buying higher end properties as residences, despite the huge ownership premiums.

Getting rid of the mortgage interest deduction (or lowering the threshold) would encourage people to save rather than consume on housing.[/quote]

briansd1 –
I never calculated what my threshold for ownership premium, but I do know this:
If the interest on my Jumbo mortgage is no longer deductible, I will turn my primary into a rental property and rent somewhere else.

I suspect there would be similar activity by others with similar means and similar math skills.