For several months a number of experts and new sources were anticipating that the 2018 tax reform would have a negative impact on the real estate market. Quite a few sources were reporting that there could be a significant price depreciation because of changes in the tax code. Some were also surmising that there would be a significant drop in buyer demand. The dream of owning a home in America seemed to be hanging in the balance.

Now that we are past the first quarter of 2018, and we can really begin to look at the numbers and get a feel for the impact of the tax reform on the real estate market. Here are a few important questions we can ask.

1. Has tax reform killed off home buyer demand?

If we take a close look at the Showing Time Index which “tracks the average number of buyer showings on active residential properties on a monthly basis” and is a “highly reliable leading indicator of current and future demand trends,” we see that the number of home buyers has actually risen each month over the last three months. In fact, the numbers are even higher than they were for the same months last year. This shows that buyer demand is going up, not down.

2. Have the tax changes affected America’s belief in real estate as a long-term investment?

A few weeks ago, Gallup released its annual survey that asked Americans which asset they thought was the best long-term investment. This is what the survey showed:

“More Americans name real estate over several other vehicles for growing wealth as the best long-term investment for the fifth year in a row. Just over a third cite real estate for this, while roughly a quarter name stocks or mutual funds.”

The same survey also showed that there has been no significant change in the percentage of Americans who believe real estate is a good investment in the past year.

3. Has the homeownership rate been negatively impacted by the tax changes?

In her latest “Z Report,” Ivy Zelman showed us that the 2018 tax reform didn’t damage the homeownership rate, but instead helped it.  She explains it this way:

“We have been of the opinion that homeownership is most highly correlated with income and the net effect of tax reform would be a positive, rather than negative catalyst for the homeownership rate. While still in the early innings of tax changes, this has proven to be the case.”

4. Will the reforms in the tax code cause home prices to tumble over the next twelve months?

According to CoreLogic’s latest Home Price Insights Report, home prices will appreciate in each of the 50 states over the next twelve months. Appreciation is projected to be anywhere from 1.9% to 10.3% with the national average being 4.7%.

As we continue to move through the year and see more numbers, we can see that the dire predictions of the 2018 tax reform have not panned out as anticipated.

If you’re ready to buy a home Flagstaff and the surrounding area, we can help.  We’re happy to answer any questions about the process and make sure you have the right information going into the home buying process. You can also search for your dream home now using our convenient home search tool