The new tax code limits the deduction of state and local property taxes, as well as income or sales taxes, to a total of $10,000. When the tax reform legislation was put into law at the beginning of the year, some experts felt that it could have a negative impact on the luxury housing market.
Mark Zandi of Moody’s Analytics:
The National Association of Realtors (NAR) predicted price declines in “high cost, higher tax areas” because of the tax changes. They forecasted a depreciation of 6.2% in New Jersey and 4.8% in Washington D.C. and New York.
What has actually happened?
Here are a few metrics to consider before we write-off the luxury market:
1. According to NAR’s latest Existing Home Sales Report, here is the percent change in sales from last year:
2. In a report from Trulia, it was revealed that searches for “premium” homes as a percentage of all searches increased from 38.4% in the fourth quarter of 2017 to 41.4% in the first quarter of 2018.
3. According to an article from Bloomberg:
Aaron Terrazas, Zillow’s Senior Economist, probably summed up real estate’s luxury market the best: