2019 Economic Outlook
Residential Growth of a Quiet Sort
2019 is going to look a lot like 2018 despite the rising interest rates and weakening buyer enthusiasm. NAR Chief Economist Lawrence Yun predicts. “It’s going to be more of the same, in terms of growth,” he says.
Economic fundamentals remain strong even with talk of a trade wars with China and other countries.
Existing and new home sales combined are predicted to increase from 5.97 million to 6.1 million. Helping to drive the increase are gains in new-home sales, from 623,000 to 690,000, as builders accommodate the country’s growing population. “Builders will build just because of the accumulated pent-up housing demand over the years from the rise in population,” says Yun.
Tax Law Impact
Changes made to the federal tax deductions at the end of 2017 are also dampening price gains of expensive homes. “The Tax Cuts and Jobs Act lowers the cap on the mortgage interest deduction from $1 million to $750,000 and also places a $10,000 cap on state and local tax deductions. Those caps could cut into the tax benefit for many owners of costly homes, especially if they’re in states with high property taxes. Increases in the standard deduction mean that fewer owners will be opting to itemize their deductions any way”. (Magazine.Realtor)
“Yun says in pricey markets, like some suburban areas of Chicago, owners are starting to have trouble finding buyers who don’t want to put a lot of money into a house if they can’t fully deduct property taxes. “We have to wait for actual data to come out, but anecdotally, the tax law might be playing a role in slowing sales of upper-end homes,” he says.” (Magazine.Realtor)