The “Big Beautiful Bill” perpetuates a long-standing misconception that subsidies provide a lasting boost to the housing sector.

President Donald Trump’s flagship legislation, signed into law on July 4, will, among other things, quadruple the deductibility of state and local taxes — commonly known as “SALT” taxes — up to $40,000 per year for many taxpayers. That reverses a $10,000 cap established eight years ago during Trump’s first term in office.

This change will make property taxes a much more likely deduction for a substantial number of California homeowners and potential buyers.

So what could be amiss with such government generosity?

Well, it translates to another housing subsidy that further props up ridiculously high sale prices and further complicates a badly wounded real estate market. You see, various ownership incentives, promoted by both political parties over the decades at the local, state and federal levels, have made the housing market overly dependent on such subsidies.

These incentives range from the deductibility of mortgage interest to tax breaks on home sale profits to government cash infusions for down payments or other financial needs of home seekers. And don’t forget the Federal Reserve’s manipulation of the mortgage rate landscape.

Yes, “supporting” homeownership is a noble cause. Yes, these subsidies are typically offered with the best intentions. Consider the politically well-connected real estate groups that push them, too.

Still, sadly, tossing more money at the housing market only benefits the few who qualify – and makes house hunting a futile chase for the masses.

Consider that 65% of Americans owned their homes in 2025’s first quarter. That’s the smallest share since the end of 2019, just before coronavirus pandemic upended the economy.

After all that pandemic-era homebuying madness, including historically low mortgage rates, the ownership needle is stuck in neutral.

Too much good stuff

You see, the housing market is excessively stimulated. Take the rise in SALT tax deductibility.

It effectively gives house seekers greater financial capability to purchase a home because their property tax expense, post deduction, will be reduced. It’s much like how the ability to write off mortgage interest — within prescribed limits — gives borrowers enhanced purchasing power. Same for down-payment assistance programs.

And don’t get me started on how the Fed’s ill-fated pandemic-era slashing of mortgage rates – which included buying $1 trillion of mortgage bonds – distorted the housing market.

All of it creates more money chasing a limited stock of homes. And the true winners are home sellers who get premium, government-juiced pricing.

Equally troubling are “Bill Beautiful Bill” provisions that turbocharge tax breaks for real estate investors. This will create more competition for house hunters seeking a place of their own.

If the nation were genuinely committed to home ownership, perhaps it’s time for different tactics.

Falling prices

Simply put, affordable housing means lower prices.

Incomes can’t grow fast enough to keep up with home prices. The “Big Beautiful Bill” should boost take-home pay for many Americans. Yet the biggest beneficiaries are probably wealthier folks who already are owners.

Even a massive construction push, often touted as a cure for affordability, only works if housing creation is significant enough to cut home prices. And don’t expect developers to overbuild willingly.

So, envision a scenario where incentives were harshly eliminated. We’re living through one today, namely the Fed’s change of heart.

The central bank’s actions since 2022 have more than doubled mortgage rates from the all-time lows created by its previous policies.

The rush to buy ended as few can afford today’s inflated house payments. The decreased demand is slowly eroding home appreciation as signs of depreciation pop up across the country.

If mortgages remain expensive, prices will likely tumble. That’s what fewer subsidies can do.

Of course, my anti-incentive plan has one wrinkle. It creates an economic loser: current property owners who would see their values drop.

And nobody gets elected – or re-elected – running on a “let’s slash home prices” platform.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com