Has the 2018 Tax Reform Affected the Housing Market?
During the past few months, many people and new sources were speculating that the 2018 tax reform would adversely affect the real estate market. A number of sources were reporting a potential for double-digit price depreciation because of changes in the tax code. It was even suggested that there would be a significant drop in buyer demand. The dream of owning a home in America was feared to hang in the balance.
Here we are after the first quarter of 2018, and now we can start looking at the numbers and get a feel for the impact of the tax reform on the real estate market. Here are a few important questions we can ask.
1. Has tax reform killed off home buyer demand?
Taking a look at 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,” it’s evident that the number of home buyers has actually risen each month over the last three months and is even higher than it was for the same months last year. This shows that buyer demand is going up, not down.
2. Have the tax changes affected America’s belief in real estate as a long-term investment?
A few weeks ago, Gallup released its annual survey that asked Americans which asset they thought was the best long-term investment. This is what the survey showed:
“More Americans name real estate over several other vehicles for growing wealth as the best long-term investment for the fifth year in a row. Just over a third cite real estate for this, while roughly a quarter name stocks or mutual funds.”
It was also shown in this survey that there has been no real change of the percentage of Americans who believe real estate is a good investment in the past year.
3. Has the homeownership rate been negatively impacted by the tax changes?
In her latest “Z Report,” Ivy Zelman helps us to understand that the 2018 tax reform didn’t damage the homeownership rate. In fact it helped it. She explains it this way:
“We have been of the opinion that homeownership is most highly correlated with income and the net effect of tax reform would be a positive, rather than negative catalyst for the homeownership rate. While still in the early innings of tax changes, this has proven to be the case.”
4. Will the reforms in the tax code cause home prices to tumble over the next twelve months?
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%.
As we’ve proceeded through the year, we can see that the dire predictions of the 2018 tax reform have not affected the real estate market adversely. If you’re ready to buy or sell a home in Albuquerque, let us help. You can search for your dream home now using our convenient home search tool. And make sure to follow us on Facebook for the latest real estate updates for Albuquerque and the surrounding areas.
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