2018 Tax Reform Impact on Housing Market
Predictions as early as last year were that the 2018 TAX CHANGES would be disastrous for the housing market. Headlines warned that double-digit price depreciation was coming and suggested demand from buyers could sink like a ship. There was even sentiment that home-ownership could lose its coveted status as a major component of the American Dream.
As we look at numbers from the first quarter, we can begin to measure the actual impact that tax reform has had on the real estate housing market.
Tax Reform Has not killed off buyer demand
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" reported that buyer demand has actually increased each month over the past three months and is HIGHER than it was when compared to the same time period last year. Buyer demand has not dropped, rather, it has increased.
Tax Changes have not affected America's belief in real estate as a long term investment
A few weeks back, Gallup released in annual survey which questions Americans which asset they believed to be the best long-term investment. The survey found: "More Americans name real estate over several other vehicles for growing wealth as the best long-term investment for fifth year in a row. Just over one third cite real estate for this, while roughly twenty-five percent say stocks or mutual funds."
Also found in the survey was the percentage of Americans who consider real estate the best long-term investment remained the same, unchanged from last year.
Home Ownership Rate Has Not Been Negatively Impacted
Not only did the home-ownership rate not crash, it actually increased when compared to Quarter 1 of 2017 as reported by the Census Bureau.
Ivy Zelman from "Z Report" explains that the tax reform did not hurt the home-ownership rate, It actually enhanced it: "We have been of the opinion that home-ownership is most highly correlated with income and the net affect of tax reform would be a positve, rather than a negative catalyst for the homeownerhips rate. While still in the early innings of tax changes. This has proven to be the case."
The Higher End Market Has Not Been Crushed By State & Local Taxes (SALT)
The Existing Home Sales Report out by theNational Association of Realtors Reported:
- Real Estate Sales between $500,000 and $750,000 increased 4% year-over-year
- Real Estate Sales between $750,000 and $1 Million increased 15.1% year-over-year
- Real Estate Sales $1 Million increased 17.3% year-over-year
The Tax Rerorm Will Not Cause Home Prices To Fall Over Next 12 Months
Per Corelogic's Home Price Insights Report, prices for homes will appreciate in each of the 50 states during the next 12 months. Projections for appreciation are anywhere from 1.9% to 10.3% with the national average coming in at 4.7%.
The sky is falling doonsday scenarios predicted by some because of the tax reform fears seem to have alreday blown over when we look at early housing industry numbers as reported.
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Disclaimer:The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. John Sabia PA and Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. John Sabia PA and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.