Survey: New Tax Code Expected to Have Little Impact on Housing Market
March 13, 2018
Title agents and real estate professionals believe the recent change to the U.S. tax code will only have a minimal impact on the real estate industry, according to the latest Real Estate Sentiment Index (RESI) from First American.
Results are based on a quarterly survey of independent title agents and other real estate professionals.
“When it comes to the new tax code, title agents and real estate professionals—the folks that spend their days closing real estate transactions—do not believe that the new tax code will have a meaningful, negative impact on the housing market,” said Fleming. “In general, you could argue that title agents and real estate professionals surveyed believe the tax code does not meaningfully drive housing prices, supply or demand. Title agents and real estate professionals know that, when it comes to buying and selling a home, consumers consider more than just the tax consequences of homeownership.”
Those surveyed slightly leaned toward the opinion that the new tax code would not negatively impact house appreciation, but responses were split relatively equally. Of the respondents, 27 percent believe that the tax code could negatively impact house price appreciation, 35 percent believe it will not do so, 35 percent were neutral on the topic. The fact that expensive markets with higher-priced homes are more likely to be impacted by the new tax law because of the limit on the deductibility of state and local property taxes may have caused the split in opinion, Fleming said.
“Indeed, survey respondents in areas with high housing costs, such as Washington D.C., California and New York, were more likely than others to agree that the new tax code would negatively impact house price appreciation,” Fleming added.
Title agents and real estate professionals were also asked if the new tax law changes may hinder the supply of housing by reducing the willingness of homeowners to sell. Almost half of the respondents (46 percent) do not believe the new tax code will significantly reduce existing homeowners’ willingness to sell. The survey showed that another 37 percent of respondents thought there would be no impact at all. In fact, only 17 percent of respondents thought that the tax code would significantly reduce homeowners’ willingness to sell.
“We also asked title agents and real estate professionals about the tax code’s potential impact on home buyer demand,” Fleming said. “More than 75 percent of survey respondents indicated that the tax code changes would not significantly reduce demand (45 percent) or would have no impact on demand at all (32 percent). Only 23 percent of title agents and real estate professionals surveyed believed that the tax code changes will reduce demand.”
Contact ALTA at 202-296-3671 or communications@alta.org.