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While We’re Thanksgiving Napping, Uncle Sam is Readying to Carve Up The Mortgage Interest Deduction

This article was originally published on the Seattle Homes Blog:

Thanksgiving mortgage interest deductionThanksgiving is a time for Americans to relax with family, eat a bit too much, and take a tryptophan-induced nap. We’d all be happy to ignore politics for a while with the election finally over, but politicians are sharpening their knives over one of American taxpayers’ most-cherished financial incentives. While more than 90 percent of Americans support the mortgage interest deduction, there is broad agreement that it will be targeted in Washington, D.C. in the coming year in an effort to reduce budget deficits.

Changing Course(s)

Every Thanksgiving you can’t wait for your mother’s homemade turkey stuffing. It’s practically the main reason you’re coming to dinner. So, when you arrive this year and it’s a Peking duck with an orange sauce, you may feel like you’ve been had.

This is how millions of homeowners will be treated if we change the rules of the mortgage interest deduction. They created a budget to buy a home. They worked with their mortgage adviser and tax planner to decide what they could afford. They bought a house, knowing how much they could deduct in taxes every year and set their budget accordingly. Reduce the MID, and we immediately increase their housing payment. Through no fault of their own, families will struggle with their budgets because the tax rules they had planned on were pulled out from under them.

Cook it Fast and Hot or Slow and Low?

Reducing the MID is one of those shortcuts that seems like a quick fix. Raise homeowners’ tax bills, and reap the immediate budget rewards. In reality, it’s like baking a turkey at twice the temperature to save half the time. It will certainly get done faster, but the blackened bird is going to shorten next year’s guest list significantly. When tax bills go up quickly, short-term revenue increases, but take home pay and disposable income for home buyers go down. Without the deduction, homes become less affordable, and stagnating home sales are never good for long-term tax revenue or the economy.

The mortgage interest deduction, on the other hand, has a long-term, slow growth effect on the economy. It makes purchasing a home more affordable for first time buyers, but it also has a multiplicative effect. Those buyers start a slow heating of the market as they purchase homes and allow the sellers to become move-up buyers. More buyers create more competition and the ensuing price appreciation creates fewer underwater homeowners, fewer foreclosures, and healthier neighborhoods.

When we encourage home sales through the mortgage interest deduction, there are far more sources of long-term revenue. More real estate agents, appraisers, lenders, inspectors, builders, tradesmen, title officers, sign companies, marketing companies, office supply companies, and hardware stores experience increased income. They all pay more income tax, resulting in more tax revenue–but their take home pay is still increasing. Consumption has always been the engine of our economic growth, and people with more income will inevitably spend more.

Who’s Coming to Dinner?

Much of the debate over the mortgage interest deduction centers on who “deserves” to get the deduction. Some proposals will contend that homeowners with certain incomes shouldn’t be included, or that homeowners with higher-priced homes and higher-balance mortgages are not worthy of the deduction (keep in mind that 2/3 of homeowners claiming the deduction have less than $100,000 in total household income).

These exclusions really miss the point. The mortgage interest deduction exists to encourage homeownership and keep the market healthy as a whole. A bottom-heavy or top-heavy market isn’t healthy. Strong sales at all price levels are required to increase overall prices and reduce distressed properties. Any reductions in this incentive will have a negative impact on the market as a whole.

Time To Wake Up and Go Home, Folks.

Continually standing up in defense of the mortgage interest deduction can become tiresome, much like your holiday house guests. The first time you hear a story it can be intriguing and energetic. By the third time, it just feels like an effort to keep your eyes open. We don’t want to talk politics over the holidays. Falling asleep on the mortgage interest deduction would be easy.

Right now, though, the stakes for this much needed homeowner benefit are high. Ever-increasing voices in Washington, D.C. are lining up to take a piece of the pie. American homeowners (who already pay 80 to 90 percent of the nation’s income tax bills) shouldn’t be singled out for tax increases simply because they bought a home.

Reducing the MID would be counterproductive for the nation’s economy as a whole. Real estate accounts for nearly 1/5 of the nation’s GDP. It is in our country’s best interest long-term to encourage homeownership, healthy real estate markets, and economic growth through incentives like the mortgage interest deduction.

Sleep off that stuffing, get your Black Friday shopping done, and then it’s time to get back to work protecting the American dream.

Strategic website development: avoiding squeaky-wheel engineering

This article was originally published on Inman News:

Whether you’re building your first website or re-engineering one that’s been live for years, it can be difficult to have a clear vision. The cacophony of advice from consumers, industry associates, and vendors makes for a confusing outlook on the path toward a valuable resource for your company and your customers.

Too often our attention is focused on the loudest voices — the proverbial “squeaky wheels.” Whether they’re pushing shiny new objects, preaching easy profits, or attempting to scare us away from purportedly dangerous avenues, they’re often doing so for their own short-term personal gain or satisfaction. The long-term success of our businesses, in most cases, isn’t a large part of the squeaky wheel’s focus.

To avoid squeaky wheel engineering in the development of a website, business owners need to be open-minded, but also analytical, about every new idea or strategy. Even more so, they need to be highly skeptical about the veracity and merit of the source of any advice they receive.

Unsolicited consumer comments

Consumers who contact your company with problems or suggestions about your website can be highly valuable. Technical problems that users are experiencing and non-intuitive navigation that impedes discovery are just a couple of the many issues that consumers can bring to light. Businesses should encourage their users to report suggestions and problems, as they’re clearly the same issues that many other users are facing.

At the same time, one user’s opinion does not necessarily carry across to the majority of users’ preferences. While a handful of your website’s visitors may really prefer the multi-field, complex search form that they’re comparing on your site and others’, there may be twice as many other users quietly using your simple search and loving it. Changing your website’s look, or functionality, to appease a minority of your users is the quickest way to send the majority off to someone else’s business.

So, how do you find the right advice, or at least the right starting point for making website development decisions?


If you’ve got your own website, there is no greater truth about its effectiveness than analytics. How users get to your site, what they do on the site, and how long they stay will tell you almost everything you need to know about what is currently working, and what is not.

Whether you’re using Google, Moz, Bing, or some other webmaster/analytics tool, you need to take the time to study your analytics. Which on-page buttons get clicked, which links get selected, and which get ignored? Which pages are consumers landing on from search results? How quickly do they leave, or do they continue to other pages? Which is the most popular landing page, link, or piece of content that drives consumers to actually sign up/register/purchase?

Watching what consumers actually do on your website, as opposed to what they say they do, is the fastest shortcut to aligning your product with their preferences. Tracking 1,000 consumers’ actions anonymously yields far more valuable resources than listening to one of them rant.

Industry associates with analytics

If you’re starting a new website, you don’t have past analytics to review. There are certainly others in your industry doing the same things you are, however. While in most industries, competitors hide their analytics away from others, real estate is a rare breed where there are associated companies around the country who will lay out exactly what they are doing online. These are the people you can trust–they’re not pitching you a line, they’re showing you the proof.

Find the discussions online about successful companies that have analytics backing up their success, and you can learn from their experiences. See which vendors, strategies, navigation, content, etc. work for them. These are not people selling a product or asking for you to fix something to fit their preferences. They’re the crazy kind of people who believe that by laying their business blueprint out online for everyone to see, they’ll benefit in the long run. Take them up on the offer.

Surveys and focus groups can broaden input

If direct consumer feedback is your ultimate goal, make sure you’re receiving it from a statistically significant portion of your current or potential customers. There’s a lot to be gained from a broad sector of your customer base giving feedback and suggestions for your online direction.

Focus groups and surveys can allow you to hear from more than just the customers who send you unsolicited comments. They provide a more diverse group of consumers who you might not ever hear from without directly asking them for input.

Just be very careful that you keep the results of these kinds of programs in a separate bucket from your analytics. The results are purely qualitative, not quantitative, and the two don’t mix well. Surveys and focus groups are more useful in the idea generation stage of business planning, because of their skewed representation.

Every method has flaws, and some of your consumers are wrong

Surveys have plenty of flaws. Users have to opt-in to the process. The responses you receive will overwhelmingly come from customers who are unusually upset, happy, or bored. The consumers who are satisfied with your website, but busy, will likely not respond, and those are a very important segment of your base. Those who didn’t respond may, as an overall group, have very different opinions and habits.

The questions you pose in a survey will often lead consumers to answers they wouldn’t have supplied on their own. If you suggest potential changes to your website, a user will often decide that they are good ideas, even if they hadn’t previously felt the need for these changes. This can create the false sense of desire for a product or function from the overall customer base and create unnecessary development work for you.

Focus groups often exacerbate surveys’ problems. Your opt-in respondents are now not only a skewed sample based on their emotional pull to be involved, they’re also the kind of people who want to speak in public. The feedback received from a focus group can often be influenced by consumers’ need to make a point, to agree/disagree with others within the group, and to applaud or indict the business or services being discussed. In short, the results can include some great ideas, but can also create a wildly exaggerated picture of what your consumer population feels.

Don’t be a slave to analytics, either. While the truth buried in that data might be the most powerful tool in your arsenal, success isn’t purely traffic flow and conversion rates. You may find that a particular piece of content is wildly popular for brand recognition, but doesn’t drive a lot of customer sign-ups. Other parts of your website might be driving a higher conversion rate, but turning off a very high rate of the consumers who don’t sign up or register.

You’ll have to decide on your own what your business strategy is for these kinds of analytics questions. Short-term conversion might be the one and only goal. Driving long-term relationships at the expense of some short-term sales may be a more palatable direction for your business. Keeping an engaged, smaller core of users could be preferable to driving a wide range of traffic with less focus.

Choose a direction, find reliable comparison points, and verify your results

Developing your website requires you to have a strategy. Changing direction based on a comment from a colleague, a complaint by a customer, or a story about a new product is squeaky wheel engineering, and it will get you nowhere quickly. When you know the direction you’d like to go, find verifiable examples of others who are doing what you’d like to do. Plan your development to use tools that have a verified track record of success, and then monitor your own progress with analytics.

When you know exactly what you’re trying to achieve, your path is much clearer. Working toward that goal with confidence makes it easier to avoid distractions and the squeaky wheels.