This writeup makes the excellent point that the weight of the new tax structure falls heavily not only on the high-population coastal states but also on the younger demographic within those states.
Coincidentally the very people who voted for Hillary.
But for housing, especially in very competitive markets, I feel that things will prove different. Already, successful house purchases come in above the offering price (from what I've seen) in the Bay Area. Do you think the loss of mortgage interest deduction will lead sellers to decrease their asking prices?
Indeed, for almost all houses (even in the Bay Area), people count on the tax deductions to determine how much house they can buy. If you can afford to pay a net $1,800 per month, for example, you can buy a $500,000 house (with a $2,400 monthly payment) given the roughly $600 per month in tax breaks. If you get rid of the tax deduction, you can no longer afford a $500,000 house, and neither can all the other people who previously had a $1,800/month budget. In the long run, that drives the value of the house down by the amount of the lost tax deduction.
The bigger issue is SALT, which is designed to implode local government.
The reverse - making mortgages cheaper - would also just raise prices.