What if Congress passed a massive tax bill with scary cutbacks in deductions for homeowners — prompting dire predictions of mass property-value declines — but nothing much happened?
What if home prices in the market segments expected to be hurt the most by the tax changes actually rose significantly and showed no hints of decreasing? Six months after the passage of the Tax Cuts and Jobs Act of 2017, where are we?
The law slashed the maximum mortgage amount qualified for interest deductions to $750,000 from $1 million; capped write-offs for state and local taxes at $10,000, (previously there was no limit); and clamped new restrictions on home-equity loans and credit lines, stripping the section on “home equity” from the federal tax code altogether.
The net effects of the changes, which were designed to raise billions of dollars in new federal revenues, were widely predicted to be negative for owners, especially in high-cost, high-tax areas of the country. These include metropolitan areas along the West and East coasts, along with dozens of pockets of high-cost neighborhoods in the Midwest, South and Rocky Mountain states. Late last year, some independent economists and real estate industry advocates predicted declines in home values nationwide averaging 10 percent, with potentially much higher reductions in high-price, high-tax markets. One group forecast devaluations of up to 17 percent.
