A new Moody’s Analytics report says that by the summer of 2019, U.S. home prices will be down by 4 percent compared to where they’d be if no tax bill was passed.
Three key provisional changes in the tax bill have helped fuel these findings: doubling the standard deduction, the cap on state and local tax (SALT) deductions of $10,000, and the lowered cap on mortgage interest deductions (MID), from $1 million to $750,000. Curbed reports that the new law will double the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 couples, leading to fewer people taking the MID and SALT deductions, further weakening their value and thus home prices.
The drops are projected to hit hardest in markets where home prices are already high. East Coast cities like New York, Philadelphia, and Washington D.C. show heavy drops, as do West Coast cities, including San Francisco and Los Angeles. South Florida and a few cities in the Midwest also stand to see substantial drops.
