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5 Ways Tax Reform Has Impacted the 2018 Housing Market

Starting late last year, some predicted that the 2018 tax changes would cripple the housing market. Headlines warned of the potential for double-digit price depreciation and suggested that buyer demand could drop like a rock. There was even sentiment that homeownership could lose its coveted status as a major component of the American Dream.

Now that the first quarter numbers are in, we can begin to decipher the actual that impact tax reform has had on the real estate market.

1. Has tax reform killed off home buyer demand? The answer is “NO.”

According to 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,” buyer demand has increased each month over the last three months and is HIGHER than it was for the same months last year. Buyer demand is not down. It is up.

2. Have the tax changes affected America’s belief in real estate as a long-term investment? The answer is “NO.”

Two weeks ago, Gallup released its annual survey which asks Americans which asset they believed to be the best long-term investment. The survey revealed:

“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.” 

The survey also showed that the percentage of Americans who believe real estate is the best long-term investment was unchanged from a year ago.

3. Has the homeownership rate been negatively impacted by the tax changes? The answer is “NO.”

Not only did the homeownership rate not crash, it increased when compared to the first quarter of last year according to data released by the Census Bureau.

In her latest Z Report,Ivy Zelman explains that tax reform didn’t hurt the homeownership rate, but instead, enhanced it:

“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. Has the upper-end market been crushed by new State and Local Taxes (SALT) limitations? The answer is “NO.”

In the National Association of Realtors latest Existing Home Sales Report it was revealed that:

  • Sales between $500,000 and $750,000 were up 4.5% year-over-year
  • Sales between $750,000 and $1M were up 15.1% year-over-year
  • Sales over $1M were up 17.3% year-over-year

5. Will the reforms in the tax code cause home prices to tumble over the next twelve months? The answer is “NO.”

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%.

Bottom Line

The doomsday scenarios that some predicted based on tax reform fears seem to have already blown over based on the early housing industry numbers being reported.

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5 Ways Tax Reform Has Impacted the 2018 Housing Market

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About Area

Blairsville, Georgia is a small mountain town in the Appalachian Mountains. For many people who live in larger cities, these mountains provide a simple escape from life’s daily stresses. Stunning scenery among Northeast Georgia’s gentle peaks and beautiful creeks and rivers makes this region a natural paradise. Encompassing nearly two-thirds of Blairsville, the Chattahoochee National Forest has winding trails that lead visitors through scenic mountains, rushing rivers, and cascading waterfalls. This is where you can step back in time with nature and walk where the Cherokee Indians once lived. The Chattahoochee National Forest boasts scenic attractions such as Helton Creek Falls, Trackrock Archaeological Area (site of ancient Indian petroglyphs), and Brasstown Bald – Georgia’ s highest peak. The Russell-Brasstown Scenic Byway and the Southern Highroads Trail offer outstanding scenery. Nearby Vogel State Park with its Civilian Conservation Corps Museum is a longtime favorite for camping or a cozy cabin retreat. Blairsville's Town Square is frequently the venue for annual events such as the Downtown Spring Arts & Crafts Festival, the Memorial Day Parade, the Green Bean Festival, the Bluegrass Festival, the Sorghum Parade, Hometown Halloween on the Square, and the Christmas Parade. Everyone is invited to these family oriented celebrations! Just south of the Square, the Historical Society develops and maintains the Mountain Life Museum. It is home to the 1906 Grapel Mock House, the 1861 Payne Cabin, and annual events such as the Mountain Market and Heritage Festival. Look for live animals, heritage demonstrations, and hands-on activities such as panning for gold. Blairsville is a quaint mountain town where things move at a slower pace, and people take time to stop and smell the roses, and it makes all the difference.

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