Today, let’s discuss the 2018 housing market, what’s in store for our local area, and how the new tax cuts and Jobs Act might affect our real estate market.
What should we expect to see for our local market this year? The start of this year is likely going to be a very important moment for home sellers because several big trends are coming together to impact our Ventura County market.
The first factor is our low inventory. The way we closed out 2017, year over year from 2016, is we were down 15% in the Conejo Valley area, and 34% in the Simi Valley Area.
This is the biggest drop since 2013, and it’s part of a consistent pattern of very limited and decreasing housing supply.
Of course, the fewer homes there are on the market, the easier it is to sell, and the higher the price you can expect to get.
This is borne out by numbers: Home prices have increased almost 6.5% since last year.
Buyers becoming increasingly optimistic. They’re still out looking for homes, due, in part, to income growth and job stability. Lenders are loosening their standards, and buyers are really eager to take advantage of the low mortgage rates, which recently slipped below 4%—a historic low.
The new tax reform bill is another factor that will impact the market. The federal government recently passed the tax cuts and Jobs Act, which majorly overhauled our tax code. We’re not entirely sure how this will affect real estate as a whole. We do know that there are several changes being made that don’t positively favor home sellers.
As a result of the tax code changes, the National Association of Realtors now projects slower growth in home prices for 2018, with an appreciation rate between 1% and 3%. By doubling the standard deduction, Congress has significantly reduced the value of the mortgage interest deductions and property tax deductions as tax incentives for homeownership. However, no changes were made to the rules surrounding capital gains in home sales. This is a major victory for home sellers.
When you put these three factors together, two big conclusions emerge:
It’s a really favorable time to take advantage of the market, the shortage of our inventory, and the optimism that still remains in our homebuyers.
On the other hand, in higher-cost and higher-tax areas, we might see a decline in prices due to this new tax reform bill that’s taking away some of those perks of the mortgage interest deduction, and state and local taxes.
As a final perk for you, we received a quick guide tool from the California Association of Realtors that outlines all of the implications of the tax reform bill has on real estate. Download the Quick Guide here!
If you’re thinking about taking advantage of today’s market and getting your home sold, all you have to do is get started by finding out what your home is worth. Send an email, shoot me a text, or call me. I would be happy to sit down with you and talk to you about your home’s value in the current market.