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HOMEBUYERS
AND THE TAX
CODE: ONE YEAR
LATER
Fewer than half of homebuyers said that
last year's tax code overhaul had impacted their
home search, according to a report by Redfin.
e report states just 47% of homebuyers
admitted to being impacted, which is a drop
from last year's total of 56%.
According to the report, 14% of homebuyers
lowered their price range, and 13% are moving
to a nearby city with lower taxes.
For the report, Redfin surveyed more than
2,000 U.S. residents who plan to buy or sell in
the next year.
Redfin stated that the latest report saw the
most significant drop in the number of buyers
indicating they were better off because of the
tax reform. Eight percent of respondents said
they are searching for a higher-priced home
because the new tax law gives them additional
income, which is down from 17% last year.
e report added that 11% of buyers said
they decided to buy a home because of the
benefits of the new tax law, which is down 19%
from last year.
"Last year more homebuyers were worried
that tax reform would hurt their homebuying
budgets, but it turns out tax reform wasn't all
bad or all good for homebuyers," Redfin Chief
Economist Daryl Fairweather said. "Some
homebuyers, especially in low-tax states, are
now paying less in taxes overall, which has
left them with more cash for a more expensive
home. For others, not being able to deduct
as much of their property taxes or mortgage
interest from their taxable income was the
other shoe that needed to drop to make them
pick up and move to a more affordable area. In
the long run, we will see demand for luxury
homes in high-tax states suffer the most
because those homes have been hit the hardest
by this tax reform, and there's actually early
evidence of that already happening."
Tax reform, however, did have an impact
on high-income homebuyers, according to the
report. Redfin states that of the homebuyers
earning $150,000 or more, 61% said the new tax
law had impacted their home search.
e most significant effect reported was
that 16% of homebuyers making more than
$150,000 said they are lowering their price
range because of the new tax codes.
