Tax Reform

Starting late last year, some predicted that the 2018 tax changes would cripple the housing market. Headlines warned of depreciation and suggested that buyer demand could drop like a rock. Now that the first quarter numbers are in, we can begin to decipher the actual that  impact tax reform has had on the real estate market.

Has tax reform killed off home buyer demand? The answer is “NO.”

According to the Showing Time Index which “tracks the average number of buyer showings on active residential properties on a monthly basis” and is a “highly  reliable leading indicator of current and future demand trends,” buyer demand has increased each month over the last three months and is HIGHER than it was for the same months last year. Buyer demand is not down. It is up.

Have the tax changes affected America’s belief in real estate as a long-term investment? Has the homeownership rate been negatively impacted by the tax changes? The answer is “NO.” Not only did the homeownership rate not crash, it increased when compared to the first quarter of last year according to data releasedby the Census Bureau.

Has the upper-end market been crushed by newState and Local Taxes(SALT) limitations? The answer is “NO.”  In the National Association of  Realtors latest Existing Home Sales Report it was revealed that:

Sales between $500,000 and $750,000 were up 4.5% year-over-year

Sales between $750,000 and $1M were up 15.1% year-over-year

Sales over $1M were up 17.3% year-over-year

Will the reforms in the tax code cause home prices to tumble over the next twelve months? The answer is “NO.”

According to CoreLogic’s latest Home Price Insights Report, home prices will appreciate in each of the 50 states over the next twelve months. Appreciation is projected to be anywhere from 1.9% to 10.3% with the national average being 4.7%.  The doomsday scenarios that some predicted based on tax reform fears seem to have already blown over based on the early housing industry numbers being reported.

Sources: National Association of Realtors, CoreLogic, US Census Bureau


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