Housing-News-Report-January-2018

HOUSINGNEWS REPORT

8 ECONOMISTS PREDICT 2018 HOUSING MARKET TRENDS

5. WHAT IS YOUR REACTION TO THE GOP TAX PROPOSAL AS IT RELATES TO THE HOUSING MARKET?

MORTGAGE INTEREST DEDUCTION CAP: IMPACT BY COUNTY SHARE OF HOME PURCHASE LOANS OVER $750K IN 2017 YTD

“Though tax reform may not cause an immediate demographic shock, over the long haul it could certainly shift populations from the West and Northeast to the South and Midwest.” — MUOIO “We think the GOP tax plan won’t have much of an impact on the broader U.S. housing market, but there is potential to cool high- cost, high-tax states.” — MCLAUGHLIN

-8.1%

63.8%

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MUOIO : While the GOP tax proposal may provide some lift to economic growth which broadly benefits the housing market, its impact will vary on a regional basis. The revised mortgage interest deduction will hurt price growth at the higher end of the price spectrum, which tends to be seen in coastal markets. The double whammy of SALT will further harm some of the same markets that already have higher taxes, while regions like the South and Midwest that tend to have cheaper prices and fewer state and local taxes will be more immune to these changes. The revised mortgage interest deduction could also give an advantage to all-cash buyers and investors in

but there is potential to cool high- cost, high-tax states. Nationally, about 9 percent of homeowners have property taxes above the new SALT cap of $10,000, and 9.5 percent of listings on the market now would come with a mortgage above the new $750,000 MID cap. That said, those numbers are significantly higher in places like San Francisco, New York, New Jersey, and Connecticut. KLEINHENZ : Not much of a change for most of the U.S., but high-cost areas on the coasts and elsewhere will see that these new limits on mortgage interest deductibility and state and local taxes will temper market activity

some of the more expensive markets. Though tax reform may not cause an immediate demographic shock, over the long haul it could certainly shift populations from the West and Northeast to the South and Midwest in search of tax relief and more attainable home prices, in turn shifting the fortunes of these regional housing markets. This occurs as millennial populations appear to be plateauing in some cities while entering their prime home buying years, suggesting the potential to seek areas with more affordable homes. MCLAUGHLIN : We think the GOP tax plan won’t have much of an impact on the broader U.S. housing market,

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JANUARY 2018 | ATTOM DATA SOLUTIONS

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