It wasn’t supposed to take long for the Trump tax cuts to hobble housing prices, particularly in the high-tax, high-cost metro areas where the new law was poised to rip federal incentives to buy new homes.
Nearly nine months later, though, the The New York Times reports those warnings have not materialized.
While the nation’s housing market is showing signs of weakness on several fronts—particularly in homebuilding—prices across the country are continuing to climb. That’s true even in the million-dollar-plus markets of California and Washington, D.C., which appeared most at risk for a hit when the bill was pending.
Economists see only faint effects from the new law so far in housing data. They’re small, and they’re contained to a few high-priced, highly taxed ZIP codes, largely in blue states.
Because the tax changes double the size of the standard deduction that most taxpayers take—and reduces the incentives for Americans to claim itemized deductions—the new tax law will reduce the number of Americans who claim the mortgage interest deduction on their income taxes.
It dilutes the value of the mortgage deduction for some new, high-end buyers by limiting the tax break for interest paid to a mortgage debt of $500,000 or less. The new law also caps at $10,000 the amount of state and local taxes, including property taxes, that homeowners can deduct from their federal taxes.
The median American home sold for nearly 6% more in June than it did a year ago, according to data from the online real estate firm Zillow—the same rate as the increase from June 2016 to June 2017.
In the Baton Rouge, the median sales price in June was $201,818, a 1% increase from the month previous, according to the Greater Baton Rouge Association of Realtors. The year-to-date median sales price in June, at $198,000, was 7.1% higher than the figure in 2017.
