Some believe that the changes to the tax laws recently passed will have a devastating effect on housing and the mortgage market. Why? Because of the limitations placed on allowable mortgage interest and state and local tax deductions.
These limitations may lead to fewer home buyers and more home renters, especially in states with higher real estate taxes. Maybe…
However, if more people decide to rent wouldn’t that increase demand and raise rents? That would also increase the demand for more rental housing spurring more investment home sales and related mortgage financing. That’s good for Realtors and mortgage lenders.
On the other hand, it might have the effect of lowering existing home prices, due to reduced demand, so homes become more affordable to more consumers.
With the tax cuts, more people can save for and afford a home to purchase, at a monthly mortgage payment comparable to available homes for rent. Hey, that’s good for Realtors and mortgage lenders as well.
I seem to remember a while back when the so-called experts predicted the demise of the investment property market. They said it was game over when unit owners could no longer write off losses on their investment properties against personal income.
Somehow, it survived. Now, these same experts predict that more people will rent than own their homemaking rental properties more valuable.
Maybe, the tax reform will have the effect of spurring more home sales and mortgage financing. Or maybe, it will all balance out as it should in a free market system.
Either way, some people will rent and some will buy. It all depends on their preference and financial situation.
One thing is for sure, there will be opportunities for realtors and mortgage lenders to do business and make money.
How much money depends on what they do and how well they do it. Are you prepared to compete in the new housing and mortgage market?
As we say at LoanLogics…The game has changed. Play different.