Thursday, June 7, 2018 / by Carl Gentile
Did Tax Reform Kill the Luxury Market? Not so Far!
The new tax code limits the deduction of state and local property taxes, as well as income or sales taxes, to a total of $10,000. When the tax reform legislation was put into law at the beginning of the year, some experts felt that it could have a negative impact on the luxury housing market.
“The impact on expensive homes could be detrimental, with a limit on the MID raising taxes for those that itemize.”
Mark Zandi of Moody’s Analytics:
“The impact on house prices is much greater for higher-priced homes, especially in parts of the country where incomes are higher and there are thus a disproportionate number of itemizers, and where homeowners have big mortgages and property tax bills.”
The National Association of Realtors (NAR) predicted price declines in “high cost, higher tax areas” because of the tax changes. They forecasted ...
Sunday, May 27, 2018 / by Carl Gentile
Real Estate Tops Best Investment Poll for 5th Year Running
Every year, Gallup surveys Americans to determine their choice for the best long-term investment. Respondents are given a choice between real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.
For the fifth year in a row, real estate has come out on top as the best long-term investment!
This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26%. The full results are shown in the chart below.
The study makes it a point to draw attention to the contrast in the sentiment over the last five years compared to that of 2011-2012, when gold took the top slot with 34% of the votes. Real estate and stocks took second and third place, respectively, while still in recovery from the Great Recession.
As the real estate market has recovered, so has the belief of the American people in the stability of housing as a long-term investment.
Friday, May 11, 2018 / by Carl Gentile
5 Ways Tax Reform Has Impacted The 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 w ...
Thursday, March 22, 2018 / by Carl Gentile
Rising Mortgage Rates DO NOT Lead to Falling Home Prices
Recently, Freddie Mac published an Insight Report titled Nowhere to go but up? How increasing mortgage rates could affect housing. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year.
Many believe that an increase in mortgage rates will cause a slowdown in purchases which would, in turn, lead to a fall in house values. Ultimately, however, prices are determined by supply and demand and while rising mortgage rates may slow demand, they also affect supply. From the report:
“For current homeowners, the decision to buy a new home is typically linked to their decision to sell their current home… Because of this link, the financing costs of the existing mortgage are part of the homeowner’s decision of whether and when to move.
Once financing costs for a new mortgage rise above the rate borrowers are paying for ...
Thursday, February 22, 2018 / by Carl Gentile
Mortgage Rates on FIRE! Home Prices Up In Smoke?
Mortgage interest rates have already risen by over a quarter of a percentage point in 2018. Many are projecting that rates could increase to 5% by the end of the year.
What impact will rising rates have on house values?
Many quickly jump to the conclusion that an increase in mortgage rates will have a detrimental impact on real estate prices as fewer buyers will be able to qualify for a loan. This seems logical; if there is less demand for housing then prices will drop.
However, in a good economy, rising mortgage rates increase demand as many prospective purchasers immediately jump off the fence to guarantee they get the lower rate.
Let’s look at home prices the last four times mortgage rates increased dramatically.
In each case, home prices APPRECIATED and did not depreciate. No one is projecting as dramatic an increase in rates as the examples above. Most are projecting an increase of approximately 1% ...