BLUE STATE BLUES: Republican tax plan would hit Seattle, Eastside homebuyers dealing with pricey market.

Aspiring homeowners in the Seattle region, dealing with the hottest housing market in the country, would be hit especially hard by the new GOP tax plan unveiled Thursday.

The proposal would cap the federal mortgage-interest deduction at $500,000 for new-home purchases, down from the limit of $1 million. Basically, new homeowners would only be able to deduct the interest on the first $500,000 of their mortgage.

This won’t impact most Americans because they don’t own homes that expensive. But it’s a big deal locally, where the median single-family house selling today is worth $725,000 in Seattle and $855,000 on the Eastside.

Maybe Seattle should consider loosening restrictions on housing development.