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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

Hayesville, North Carolina is a small city in the extreme southwestern mountains of North Carolina. The city itself consists of about half a square mile of land, all of it being land. Just to the north of Hayesville, the Hiawassee River flows westward into the Rocky Mountains and Tennessee. Downtown Hayesville consists of the original historic courthouse and jail, which have been converted into a museum. There are also many unique shops and restaurants, and the idyllic little town square plays hostto many different concerts, festivals, and fun events throughout the year. Some of the most popular attractions in Hayesville consist of outdoor activities, as the Good Lord saw fit to make this area of the world a beautiful and wonderful outdoor playground. Hiking and biking trails abound, as well as tubingand fishing on the river and Fires Creek. Heritage of the mountain people as well as the Cherokee people before them is celebrated and memorialized in a couple different sites. And agritourism is a popular attraction offered by many of the local farms. The landscape here is absolutely picture perfect. Tall blue mountains rise up in the distance on all sides, while much of Hayesville is level to hilly farm and pasture land. It is truly a beautiful site for a home or just to sit back and relax in perfect peace. Many people who come to this area to visit are here to unwind and escape the daily grind. If, however, you would like to make this paradise a more permanent escape, contact Best Mountain Deals today. The people of Hayesville are always ready to welcome a new neighbor, and our team of agents most definitely have the best listings currently offered.

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