While newly-enacted federal tax laws mean Americans will experience fewer tax benefits associated with being homeowners, that’s doing little to deter home buying in North Texas, according to a study by Apartment List.
The Tax Cuts and Jobs Act of 2017, enacted in December, reduces caps on borrowing subject to the mortgage interest deduction from $1 million to $750,000. Property tax deductions on state and local taxes have also been capped at $10,000.
However, 48 percent of potential homebuyers in Dallas polled by Apartment List said the changes have had no impact on their homeownership plans. Another 38 percent said the laws will have a positive impact on their plans.
Only 14 percent said the laws have had a negative impact.
Nationally, 56 percent of respondents say the laws will have no effect on their decision. More than 25 percent said their decision was negatively impacted, while 16 percent said it was positively impacted.
Chris Salviati, a housing economist at Apartment List and author of the report, said the results show potential homeowners factor their political leanings into their buying decisions. Texas is a largely Republican state, and many see the cuts as an overall positive step for the country.
Regardless of partisanship, the laws are less likely to have an effect on many Dallas-Fort Worth homes. Real estate markets with higher home prices, such as coastal areas, will bear the brunt of the tax act, Salviati added.
“Throughout the country, it will really be the most expensive homes that see the impact,” he said. “Then there’s the fact that home buying is a complicated decision and many of those factors go beyond the purely financial. There are personal preferences, and in places where homeowners could lose a couple of thousand, it doesn’t seem that it’s going to swing the needle away from home ownership.”
But while tax changes may not impact local homebuyers, rising interest rates might. The Federal Reserve Bank on Wednesday bumped interest rates for the sixth time since the Great Recession, reported the New York Times, from 1.5 percent to 1.75 percent.
The potential of continued increases may be what encourages more North Texans to consider buying a home.
“That could serve as an incentive for people to purchase sooner to take advantage of lower rates,” Salviati added. “Home values have really been increasing at a strong clip and outpacing income growth.”
Largest North Texas Homebuilders
Ranked by # of Local New Home Closings in 2016
Rank Business Name # of Local New Home Closings in 2016 1 D.R. Horton Inc. 4,320 2 Highland Homes- Dallas LLC 1,456 3 Lennar Corp. 1,321 View This List
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