Hidden benefits for home buyers
It seems the recently passed tax legislation may have some hidden benefits for this year’s home buyers. According to a report from Moody’s Analytics, the changes could slow home price growth by as much as 4 percent by 2019.
Price growth to stall
The Republican tax plan passed in mid-December should help slow skyrocketing home price growth, according to Moody’s Analytics. A Moody’s report forecasts prices to drop by 4 percent by summer 2019, compared to forecasted prices without the tax changes.
Just to clarify: Moody’s isn’t predicting an outright fall in home prices. It’s projecting that prices will be 4 percent lower than they would have been without the new tax plan.
The drop should have serious benefits for those looking to enter the market, though it might not be so great if you already own a home.
At a market level, prices are projected to decrease most in already high-cost markets, like New York, Philadelphia, Washington D.C., San Francisco and Los Angeles. The most affected regions will be in the Northeast and on the West Coast.
Why the drop?
According to Moody’s, price drops will drop due to three key changes in the tax plan. The first is the lower cap on mortgage interest deductions, which dropped from $1 million to $750,000. The lower cap on state and local tax deductions and the doubling of the standard deduction will both help dampen price growth as well.
Homeowners in high-tax states or with high-priced properties are most likely to see the brunt of the new tax plan, suffering higher tax bills as a result.
Get today’s mortgage rates
If you’re looking to buy a home in 2018, the new tax plan just may work in your favor. Shop around and see what mortgage rates you qualify for today.