With the standard tax deduction raised by almost double and deductions on real estate taxes more limited following the tax code changes, homeowners probably won't worry as much about their taxes when buying a home. In this video spotlight, realtor.com Chief Economist Danielle Hale discusses how the 2019 tax code will impact homebuying decisions.
"There are a coupe of other changes that are impactful, but the bottom line is the same," said Hale. "Fewer people will itemize on their tax deductions, which means taxes won't be a very important factor for most homebuyers when they're thinking about whether to rent or own."
It doesn't mean people will stop wanting to own a home, taxes are just one reason people might decide to own a home," Hale continued. "But it does mean for most people, taxes aren't going to be an important deciding factor like they maybe were before."
While taxes may not be on homebuyer's radar, following the recent U.S. Bureau of Labor Statistics Employment Situation Summary, Hale commented on how job growth as well as mortgage rates have impacted purchasing power.
"The combination of earnings growth of 3.2 percent and low mortgage rates has boosted home buyers’ purchasing power in the face of rising home prices, but affordability remains a challenge, especially for entry-level buyers," said Hale. "Still, as buyers grapple with their budgets, job and earnings growth and lower mortgage rates suggest sufficient demand for sellers this spring.”