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CATHERINE REAGOR REAL ESTATE
Big housing groups stress over tax plan
Prospective homebuyers energized by job growth and low mortgage rates struggle to find properties amid a
FADING SUPPLY ALEX VEIGA ASSOCIATED PRESS
Anyone eager to buy a home this spring probably has reasons to feel good. Job growth has been solid. Average pay is rising. And mortgage rates, even after edging up of late, are still near historic lows. And then there’s the bad news: Just try to find a house. The national supply of homes for sale hasn’t been this thin in nearly 20 years. And over the past year, the steepest drop in supply has occurred among homes that are typically most affordable for first-time buyers and in markets where prices have risen sharply. In markets like San Diego, Boston and Seattle, competition for a dwindling supply has escalated along with pressure to offer more money
and accept less favorable terms. “Sellers will have the edge again this year,” said Ralph McLaughlin, chief economist for Trulia, a real estate data provider. “Homebuyers are really going to be scraping the bottom of the barrel as far as housing choice is concerned.” The intensity of the competition this spring has surprised even sellers like Kathleen Mulcahy, a 37-year-old product manager in Seattle. Within a week of listing her one-bedroom, one-bath condo, Mulcahy received 21 offers — all above her asking price of $398,000. Most of the offers came with built-in triggers to automatically rise in case a rival bidder sweetened a bid. In the end, she accepted an offer of $500,000 — all cash. See HOMES, Page 3R
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The popular mortgage-deduction tax break isn’t being cut under President Donald Trump’s plan to overhaul the tax system. That seems like a very good thing for homeowners and the housing industry. But the nation’s biggest real-estate groups aren’t celebrating. Proposed tax changes under the new plan, especially doubling the standard deduction, will lead to fewer people buying homes to tap the mortgage deduction, according to the National Association of Realtors and the National Association of Home Builders. “Current homeowners could very well see their home’s value plummet and their equity evaporate, while prospective homebuyers will see that dream pushed further out of reach,” said NAR President William Brown in a statement. When a housing advocate group talks about falling home prices, many of us get a little alarmed. Particularly because as Arizona Association of Realtors CEO Michelle Lind told me, “Arizona’s real-estate market has recently recovered from falling home prices, and we do not want to see home values tumble again due to a tax plan that eliminates the tax benefits of homeownership.” The housing industry’s main concern appears to be if the standard deduction is doubled from $6,350 for single people and $12,700 for married couples, fewer people will need to itemize to save money on their taxes and fewer people will buy homes to get the tax break. About 32 million homeowners took the mortgage-tax deduction in 2014, according to the housing groups. I was one of them. “The proposed elimination of itemized deductions for real-estate taxes will make owning a home more expensive for mid- to high earners,” Arizona housing analyst Mike Orr told me. ”Low earners probably did not itemize their deductions in the first place.” He isn’t overly concerned about what the tax changes will do to home values in metro Phoenix. “I doubt that home prices will fall as a result,” he said. He does think under the current Trump tax plan, only people earning more than $200,000 will benefit from the mortgage-interest deduction. Arizona’s typical household earns about $51,500, according to the latest census data. I understand the housing groups’ concern.
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