Now that the Tax Cuts and Jobs Act has made it through Congress and the Senate, and is just a presidential signature away from becoming the law of the land, exactly how do Americans view the prospects of the landmark legislation?
With lots of nervousness, it turns out. According to a realtor.com® survey completed earlier this week, Americans are anxious about the tax bill’s potential effects on homeownership—and might even consider changing their plans to buy or sell a home.
In an online survey of 2,324 randomly selected respondents across the U.S., a majority reported that the tax bill makes them either “concerned” (36.2%) or “very concerned” (17.2%) about being a homeowner. Put another way, less than a quarter of respondents said the bill makes them feel “positive” (15%) or “very positive” (7.2%) about homeownership.
The survey was conducted Dec. 18–19.
“The bill will have a significant impact on the housing market and overall economy, so it makes sense that people are wondering what it means to them,” Senior Economist Joseph Kirchner of realtor.com said in a statement.
Republican lawmakers say the $1.5 trillion tax-code rewrite will put more money into Americans’ pockets and stimulate the economy. The nonpartisan Tax Policy Center estimates that about three-quarters of taxpayers will be getting bigger paychecks next year, with less in taxes being taken out.
“Some house hunters—particularly wealthy buyers—will see an increase in after-tax income, making an already tough housing market even more competitive,” Kirchner said.
“This increased demand could drive prices up even higher than they are already.”
However, real estate professionals have been concerned that the tax plan will discourage people from buying homes since it lowers the cap on mortgages eligible for interest deduction from $1 million to $750,000. This is most likely to affect buyers in expensive markets, such as California and New York.
Plus, the new tax rules roughly double the standard deduction, dimming the appeal of that mortgage interest deduction.
Despite their concerns, no prospective buyers in our survey said they would postpone their plans to buy a home this year all together because of the tax changes. In fact, 29.2% reported they would fast-track their plans to buy, while 22.9% planned to move along at the same pace. About one-fifth of respondents, 18.5%, said they would take more time to buy a home if the tax plan passed.
Homeowners intending to put their homes on the market mostly remained unruffled; 57.1% said the bill would not change their plans to sell. A minority, 13.9%, expected to sell their home more quickly because of the new law; 10% expected to sell more slowly; and 7.6% said they would postpone selling.