Tax Facts Tuesday: Housing Market Benefiting from Booming Economy
Here’s the news: All signs point to a growing economy that’s helping boost the housing market. This news proves wrong the claims made by Democrats that the Tax Cuts and Jobs Act would hurt the housing market. In fact, GDP growth, which has now been projected by the nonpartisan Congressional Budget Office to accelerate to 3.3% by the end of 2018 thanks to tax reform, is helping the housing market expand.
Here are five housing facts you need to know:
- The Tax Cuts and Jobs Act will inject nearly $40 billion into the housing market this year, according to a recent report from Zillow. They estimate that Americans will use their tax savings to buy and rent larger homes, as well as to renovate their current homes. The report estimates homeowners and renters will put $13.2 billion from their tax savings directly into the housing market this year. In addition, they project that the amount spent on home renovations will double to $24.7 billion, thanks to tax reform.
- Home prices are growing at the fastest pace since 2006.The median U.S. home value is up 8.7% over the past year according to Zillow. This makes sense – a stronger economy from pro-growth tax reform results in a stronger housing market.
- The share of Americans who plan to buy a home in the next six months rose to a record high. Bloomberg reports that a record 7.8% of respondents to the Conference Board’s consumer confidence survey said they plan to buy a home within six months. A stronger economy with a 3.9% unemployment rate, strong labor market, and higher paychecks mean more Americans are looking to buy homes for their families, whether their first home or an upgrade on their current home.
- Homeownership hit an all-time high in 2017 and it is expected to continue to rise. According to the Joint Committee on Taxation, homeownership will increase from 73.9 million homeowners in 2017 to 74.6 million this year. The good news doesn’t stop there. Homeownership is on pace to grow to 78.7 million in 2026.
- Home values are rising in high tax states too. While some predicted that home values in high-cost, high-tax states like California and New York would decline, data shows values increasing there too. Bloomberg reports that home values rose 20% compared to a year ago in the Hamptons and by more than 25% in parts of San Francisco and San Jose.