The economy can make or break many decisions and on buying a house is a major one to make sure that the economy is in a good state that buying a house is not the right decision. When it comes to the marginal benefit the economy should be at an increase because purchasing the house is not anything that needs to be done but it is something that one wants to do and if the economy is bad then there is not any money available to make the extra purchase of buying a home at that time. Marginal cost in purchasing a house can affect economy by the simple fact of saving money here and there on some things in order to make sure that that they have money available to buy the house. The selling of the products they might have bought will decrease the economies profits.
The removal of tax deduction on the mortgage interest affects the housing market because it will cause people to not be buying houses because some see the tax as a cushion for them to be able to get a house that they may not have had a chance to get based on their income. If they do not have a feeling of safety in purchasing a home they will not take the chance.
The ways that government spends money on other things and the taxes make a decision a bit harder because a person just wants to make sure that buying the house will not result in not having any money to do anything else. If the government ends up spending money on things not needed then there will not be enough money in banks and other finance resources that can help a person purchase a home.