HOUSINGNEWS REPORT
8 ECONOMISTS PREDICT 2018 HOUSING MARKET TRENDS
vast number of homeowners to fully deduct, if they still itemize compared to standardized deduction. VIVAS : At the time of the realtor. com forecast, both the House and Senate had bills up for consideration, but neither had passed therefore the impact of the Tax Cuts and Jobs Act was not included in the forecast. We expect the Tax Cuts and Jobs Act will impact both current homeowners and affect the overall housing market, which is already stifled by low inventory and an increasing lack of affordable homes. The plan will likely increase after- tax income for many, including first-time buyers and millennials. However, increased demand will put more upward pressure on housing pricing and the economic stimulus created by the plan will likely lead to higher mortgage rates, keeping homeownership out of reach for many. The combined impact of the $750,000 cap on mortgage interest deductions and the increase of the standard deduction will eliminate the tax benefits of homeownership for many. Based on a recent realtor.com analysis, capping the mortgage interest rate deduction at $750,000 is only likely to impact 1.3 percent of mortgages. Although the national impact may be limited, it’s likely to discourage homeownership in large urban areas with high-priced housing stock, which
“The Trump tax cut is a net negative for the national housing market. …The impact of the tax cuts will vary substantially across the country.” — ZANDI “At the end, very good to see the maintaining of capital gains exemption from residing two out of five years (compared to what was being discussed for five out of eight years)..” — YUN
However, I do worry that it will lead to fewer home sales, as households choose to stay put so they can continue to take advantage of the current mortgage interest deduction. This could lead to fewer listings, which could actually cause home prices to rise at above-average rates for a longer period of time. ZANDI : The Trump tax cut is a net negative for the national housing market. The reduced value of the tax deductions related to housing, including the mortgage and property tax deductions, combined with higher
mortgage rates, will weigh on housing demand and house prices. The impact of the tax cuts will vary substantially across the country. YUN : At the end, very good to see the maintaining of capital gains exemption from residing two out of five years (compared to what was being discussed for five out of eight years). Also, the compromise resulted in a $10,000 property tax deduction, which 95 percent of homeowners could theoretically fully deduct. The $750,000 mortgage amount limit for interest deduction also permits a
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JANUARY 2018 | ATTOM DATA SOLUTIONS
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