There have been many inquiries regarding the new federal tax law. The statement below is the position of the Company.
In our industry, the question on everyone’s minds today surrounds the impact the new federal tax bill will have on the real estate market. Many prominent voices in real estate, including those in the areas we serve, have recently made their own predictions in the media. From my point of view, however, it would be irresponsible to draw a firm conclusion on how the tax reform could shape the market for the simple reason that at this early stage, it is impossible to know.
Historically, the key leverage point in determining the outlook on real estate is consumer confidence. This, in turn, is largely driven by four important economic factors: the stock market, the GDP, interest rates and unemployment. Each of these factors currently stands at either a historic high or a historic low, a rare and significantly favorable phenomenon to a strong economy. These positives perfectly correlate with soaring levels of consumer confidence, with the Conference Board Consumer Confidence Index®’s reading in December yielding a strong index of 122.1, just under the 17-year high mark reached in November. When consumer confidence is healthy, demand in the real estate buyer pool typically follows suit.
The newly introduced cap on property tax deductions is a negative for the market, yet property taxes represent just one consideration that must go into the purchaser’s decision process. In addition, the property tax aspect is just one piece of a far more intricate tax law. On one side we have the cap on property tax deductions and the complexity of the bill, and on the other, the high rate of consumer confidence, consumer demand and a booming economy, all coming together to create a confluence of variables that leave the future unknown. Despite this, the tried and true economic indicators that have always served as our compass are still going strong, and I remain bullish on the market looking ahead to 2018.
