Yeah not the actual cost of the home. Most homes are financed, give or take people can on average afford to have say 30% of their budget go to housing costs. So if that # mostly stays around that range, the cost of the home for the buyer comes down to 3 things 1. Price 2. Rate 3. Deduction
So when a 500k home is bought with 100 down by someone in the 33% tax brackets/5 interest rate, they're 1st year savings on the interest deduction is somewhere around 8-9k we'll say. So scrap the deduction, that is 9k out of their pockets. That is about 40% the cost of their actual mortgage. So now they can afford less "house" so to speak.
Like you said, this could be offset now that their tax rate is now 15%, sure results would vary. But it still might bring down housing costs at first (good for buyers, bad for people who just bought)
Either way, it isn't a huge deal. Just an example where it might be complicated to completely phaseout.
hno:
