This year's spring homebuying season may be one of the most anticipated in a while, as unbalanced supply and demand, rising interest rates, and the impact of the new tax law all come into play.
The new tax law is expected to mostly impact homeowners with more expensive mortgages, over $750,000, in states with higher property taxes. However, homeowners in lower-tax states or with less expensive mortgages may not be able to get no net tax savings from taking on a mortgage, The New York Times reports. Moody’s Analytics predicts that the tax law will lower home transaction prices by 4 percent, "a direct impact of tax changes and higher interest rates caused by larger deficits."
The housing market will depend on which opposing force proves more powerful: long-term fundamentals of supply and demand, or near-term ripples emanating from Washington and Wall Street. Most evidence suggests that fundamentals will prevail over time and push sales and prices higher, especially at the lower and middle tiers of the market. But the opposing forces could mean a period of uncertain dealmaking. Higher mortgage rates and a new tax law will affect several elements of home buying.
