A lot is being said about the new tax code. Two changes are expected to have an impact on the housing market. One, the reduction in the mortgage debt deductible, and two, the real estate tax deduction is now limited to $10,000. In addition to this, a higher standard deduction may lessen the incentive to purchase a home, as fewer consumers will utilize mortgage interest and property tax deductions. While these are influencing factors in home pricing, they’re not the only ones. Just as important are the standard influencers like supply and demand.
Every month CoreLogic forecasts home pricing for the next 12 months based on past trends. In South Carolina, they predict homes to appreciate an average of 3.8%. This is slightly less than the 4.2% they predict for the US average. Still great numbers.
Now enter in the new tax bill. For people thinking of selling or buying in the next year, the question may arise, “How are housing prices going to react to the new tax bill? And how will this affect my house?”
The National Association of Realtors (NAR) did an analysis recently to determine the impact the new tax code may have on home values. They took into account not just the new tax impact, but three other main driving forces of price. They are: current market conditions, interest rate effect, and the employment and construction momentum.
From their analysis, NAR is predicting slower growth in home prices in 2018 of one to three percent. The annual gains of the past five years have been five to seven percent. More importantly for us, the state of South Carolina is predicted to appreciate 3.5%. This is only a drop of 0.3%. This is a significantly less drop than what was initially anticipated. We live in a great state and it’s still a great time to own real estate!