HOUSINGNEWS REPORT
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7. WHAT IS THE BIGGEST EXTERNAL THREAT TO THE HOUSING BOOM AND WHY?
“The most serious threat to the housing market in 2018 is the Trump tax cuts.” — ZANDI “The U.S. housing bubble talk is nonsense. But there are good reasons to think that home prices are overvalued abroad, including in Canada, China and Britain. A price decline in any of these markets will get a headline coverage and may impact the psychology of buying here in the U.S.” — YUN
“Tax reform is currently the biggest external threat facing the housing market.” — MUOIO “Our current economic expansion is getting long in the tooth, at least from an historical perspective. Global political instability and conflict could potentially kick off a global recessionary period, which would put a stop to the current housing market boom” — MCLAUGHLIN
GARDNER : At this time, there are certain geo-political threats that have the potential to create economic turmoil and affect the nation’s housing market in very negative ways. There is still too much “sabre rattling” going on – specifically regarding North Korea – and this is very troublesome. ZANDI : The most serious threat to the housing market in 2018 is the Trump tax cuts. The after-tax mortgage rate will rise significantly in key parts of the country, hurting housing demand and house prices. The damage would be more serious if not for very tight single family housing markets as builders have not been able to put up enough particularly entry-level housing since the financial crisis for a range of reasons.
tax cuts and economic growth broadly support the housing market, although changes to the SALT and mortgage tax reductions may disproportionately harm expensive or high-tax markets. MCLAUGHLIN : An imminent recession. While there aren’t many signs that point to one, our current economic expansion is getting long in the tooth, at least from an historical perspective. Global political instability and conflict could potentially kick off a global recessionary period, which would put a stop to the current housing market boom. However, even if a recession does hit soon, it’s not likely to be as bad for the housing market as the Great Recession.
reasons to think that home prices are overvalued abroad, including in Canada, China and Britain. A price decline in any of these markets will get a headline coverage and may impact the psychology of buying here in the U.S. VILLACORTA : There are clearly several classes of external threats that could derail the current housing market, but most are tied to the overall U.S. economy. For instance, shocks to the major financial markets, such as a stock market correction, could lead to a downturn in housing, as could a spike in unemployment. And of course, any major military conflict would also upend the trajectory of the economy and risk changes in many sectors, including housing. MUOIO : Tax reform is currently the biggest external threat facing the housing market. As discussed earlier,
YUN : The U.S. housing bubble talk is nonsense. But there are good
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JANUARY 2018 | ATTOM DATA SOLUTIONS
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