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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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About Area

The ancient mountains, rolling hills, and pristine creeks and rivers of the North Georgia mountains have a way of calling you out into the wild, no matter the season. And the majestic mountain setting that makes the outdoors so fun and inviting also provides some of the most amazing backdrops for a home as well. Many natives to the area have perfected the art of “porch swing sitting” and will be happy to share their notes with those who need to relax a bit. With so many homes having views of nothing but the majesty of nature in many different forms, it’s no wonder the art of sitting quietly to unwind is widespread. It’s also widely understood and ensured that these mountains will remain pristine for many generations to come. The Chattahoochee National Forest makes up a large majority of land in the region, and therefore it will remain virtually unchanged and undeveloped by people for many, many years to come. The bounties of the land and celebration of mountain heritage are favorite themes for the many festivals held throughout the area and throughout the year. Local farmers, mountain artisans and entertainers have a huge, artistic and loving stage on which to showcase their talents. People from all over the world and from all walks of life come to enjoy the good food and good times of these southern Appalachian festivals. The incredible display of Mother Nature in these mountains is definitely a great reason to find a home here, add to that the never ending events and abundance of talented and lovely people and there’s really no reason not to.

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