Is Trump’s tax law helping or hurting the housing market?

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A New York Federal Reserve study suggests tax reform has contributed to the housing industry’s recent woes, but other factors may play an even bigger role

When the Republican Party first put forth its plan to reform the country’s tax laws, housing experts worried it could put a damper on home-buying activity. Now that the GOP’s tax plan is the law of the land, some fear those predictions may be coming to fruition.

During the period reviewed, the top marginal income-tax rate dropped from 39.6% to 37%, reducing the potential savings from itemizing one’s deductions by 2.6 percentage points. Moreover, property tax deductions are now capped at $10,000, meaning that at the margin these state and local taxes are no longer deductible. The mortgage interest deduction was also cut in half, which in effect increases the mortgage rate a homeowner is paying, the researchers argued.

‘Mortgage rates do have an impact. If mortgage rates do stay low, that’s certainly going to be helpful for the market especially as prices are high.’ —Realtor.com chief economist Danielle Hale To control for this factor, they compared this recent episode with two previous instances where interest rates increased by roughly that much — between the second quarter of 2016 and the first quarter of 2017 and between the first and fourth quarters of 2013.

 

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The bubble always bursts.

Depends on where you live.

Ask how many times the fed raised rates during Obama’s presidency

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Trump's tax cut are contributing to the housing-market slowdown, New York Fed findsThe Republican tax reform package passed in 2017 appears to be partly behind the slowing housing market. Fakenews That makes no sense
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