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64 I N D U S T R Y I N S I G H T / C L E V E B E L L A R As we go deeper into 2018, it's safe to say the housing industry is poised for further growth. More first-time homebuyers are reported to be flooding the market and evidence of this is that mortgage applications rose 8.3 percent in the beginning of the new year, according to Mortgage Bankers Association's (MBA) latest report. Even refinance volume, which was predicted to be in a serious slump in 2017 after a banner year in 2016, seems to now be on an upward trajectory. So, why the pessimistic headline? Headlines like this seem to be all over the place—from the National Association of Realtors (NAR), to the National Association of Home Builders, to the MBA, and many more. Loud concerns have been voiced over the future of housing and homeownership. Of course, much of that conversation is the result of the latest tax reform law—the Tax Cuts and Jobs Act—and how it will affect housing. Some say the new tax laws could cause the housing market to cool and home values to drop. is is an already toned-down reaction from when tax legislation was first introduced. An earlier version of the bill prompted NAR to publish a detailed state-by-state analysis that estimated all 50 states will experience drops in home values. No doubt, many homeowners are pausing to assess where the chips will fall before they make big home buying and selling moves. For housing and mortgage industry professionals, this is the time to step up into an advisory role to calm clients' nerves and to offer solutions. Personal political feelings toward the new act aside, an opportunity exists to stay one step ahead of questions customers may have and to ease the cold feet they may experience. UNDERSTANDING THE CHANGES It's true that the new tax laws will impact housing in a few key ways. Some of the most- discussed changes include: » Capping of the mortgage interest deduction to $750,000, down from $1,000,000 » Requiring a longer occupancy period (up from two years to five years) to avoid a capital gains tax » A new cap of $10,000 for combined real estate, local, and state tax deductions for taxpayers who choose to itemize However, what we need to recognize about tax reform is that it's not a standalone event that could affect home value but rather one of many factors impacting the larger housing market. Many factors could trigger falling home prices: interest rate hikes, geopolitical tensions, Analysts forewarned that with the Tax Cuts and Jobs Act enacted, we will see the housing market cool and home values drop; however, housing professionals can help assuage borrowers' cold feet and help protect their financial investment in case of a real estate correction.