Lawrence Yun, chief economist for the National Association of Realtors, recently said that changes in the new GOP tax law may cause home values to drop five percent in some high-tax states like New York and California.
Yun added that the entire U.S. real estate market may be impacted by the possibility of higher mortgage rates, telling CNBC, "Mortgage rates could rise because we are seeing larger deficits over the horizon," due to the tax law. Bigger deficits may lead to more inflation, which could cause the Federal Reserve to hike interest rates more aggressively.
While wealthier residents of high-tax states may be scambling, most of the country won't be affected, said Yun. "Ninety-five percent of homeowners and homebuyers are not impacted by mortgage interest deduction limit of $750,000 or the property tax deduction of $10,000."
