Tax Reform’s Impact on Homebuyers Lower Than Expected

Less than half of the 1,8000 homebuyers surveyed in March by Redfin said that their home search was affected by the income tax overhaul that capped deductions for mortgage interest rate payments and state and local taxes.

Compared with a March 2018 survey, when details about tax reform were speculative, less homebuyers indicated that they lowered their price range due to the decreased tax benefits for high-priced homes, down to 14% compared with last year’s 16%. Also, just 13% said they shifted their search to nearby cities with lower taxes and 9% said they shifted their search to lower tax states compared with 16% and 12%, respectively, in the 2018 survey.

“Last year more homebuyers were worried that tax reform would hurt their home buying budgets, but it turns out tax reform wasn’t all bad or all good for homebuyers,” said Daryl Fairweather, Redfin’s chief economist.

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