Tax Reform and the Housing Market
Jeff Andrews summarizes an analysis of the GOP tax reform bill approved in December thusly:
It may be a few years before experts can accurately assess how the new tax reform law will affect each city’s individual housing market, but one thing is clear: For the first time in a century, the federal government has backed away from subsidizing homeownership as a pathway to the “American Dream.”
The specifics of the tax law that Andrews reacts too are the tax bill's decision to lower the cap on mortgage interest deduction, cap state and local tax deductions, and doubling the standard deduction. According to Andrews, all of those changes will work together to raise housing prices in already expensive markets and have potentially no effect in low and moderately priced markets. "Is there upside for homeowners in any market?" asks Andrews. "It’s hard to find any."
The article includes an interactive graphic that pulls data from several sources to spit out projects for the housing markets of 14 of the country's metropolitan areas as the tax code takes effect.