If you have a heart for a new home this year, the real estate market is shaping up nicely for February.
The market has a nice breeze pushing it along as good job numbers, lower tax rates, and a stronger economy push a market that has been good for sellers because prices are higher, and good for buyers because mortgage rates are low.
Meanwhile, the Federal Reserve is widely expected to raise interest rates incrementally during 2018 to reach a 2 percent increase. Since the next Fed meeting isn’t until the end of March, February remains a great time to get a mortgage and buy a home.
Homeowners who have waited to market their properties are increasingly likely to do so now because asking prices are a little higher but still attractive to potential buyers.
For buyers, the time is right to get a jump on the Spring sales season. The new tax plan passed by Congress in December 2017 won’t affect many homebuyers, at least as far as the new mortgage deduction is concerned.
For buyers of very expensive homes, it allows a deduction of mortgage interest up to $750,000. This is lower than the previous limit of $1 million.
The limit only affects new mortgages, not existing mortgages. Since the median list price of a home is about $250,000, most homeowners won’t be affected by the limit decrease. The new limit is expected to affect about 1.3 percent of new mortgages on very expensive homes, usually in expensive housing markets such as coastal areas.
The new limits on deductions aren’t expected to affect many people nationally, according to realtor.com. That’s because homeowners can only take the deduction if they itemize and only about one-third of taxpayers do that. Of those that itemize, just over 21 percent use the deduction. However, it will affect high-cost markets in local areas.
Experts are divided as to the impact of the new tax plan on housing. Some see the tax changes as encouraging renting in high-cost areas, causing housing prices to fall. On the other hand, with a higher standard deduction, taxpayers in lower brackets could find themselves able to buy a home. That could push prices up, according to realtor.com.