Update on the 2017 Tax Law and the Long Beach Island NJ Real Estate Market
With the new year upon us I have been inundated with questions and projections regarding the economy, interest rates and of course buying a home in the LBI real estate market. It is always hard to predict the future and this year is going to be even harder to predict because of a new variable — the 2017 tax law changes. As I have mentioned previously, the lowering of tax rates is likely to stimulate an already strong economy. This should be good news for jobs, retailers and more. The question remains how strong will the economy get and what will the effects be on interest rates, oil prices — and ultimately inflation. These factors and more will likely impact buying patterns of home shoppers in the LBI real estate market. We have already seen rates and oil prices creeping up in anticipation of the action. This far, we have seen little impact to the real estate market on Long Beach Island as buyer interest remains strong.
Tax Law and LBI Real Estate Market Predictions
When we move to the LBI real estate market, the prediction game gets even harder. Economists were already predicting continued inventory shortages of homes for sale, more new homes coming on-line and moderating price increases but the change in the standard and mortgage deductions will certainly have to be factored into the equation, especially here in New Jersey which is a higher tax state. Likewise the areas that many buyers in the LBI real estate market originate from (New York, New Jersey and Connecticut) are also higher tax states. This could potentially impact shopping habits in the LBI real estate market. Luckily we do have many buyers from Pennsylvania which will be less impacted by the changes. The doubling of the standard deduction means that those purchasing on the lower end of the scale are more likely to not take advantage of the deduction of interest on home loans. Likewise, those who own higher priced homes may be less likely to make a move because they would lose part of their present deduction. That said, LBI is a second home market and the overall loss in deductions most likely will not be enough to impact the shopping habits of buyers in the LBI real estate market. The fact that the primary home market, which has more exposure to the ups and downs of the market, will likely see less of an impact should help to keep the market stable.
Here is the additional good news. There are four solid economic reasons to own a home and the tax deduction is only one of these four. A second home on Long Beach Island will still serve as a leveraged investment, a forced savings plan and protection against inflation. As a matter of fact, I feel the tax law’s effect upon interest rates may be a more important factor in determining the direction of the real estate markets than the tweaks made in the deductions. In this regard, those who feel that rates will ultimately rise because of the economic effects of the law may very well be inclined to purchase now rather than later. Of course only time will tell what direction the LBI real estate market takes but for now I am still optimistic.
By : Nathan Colmer | The Van Dyk Group
Cell: 609-290-4293 | Office: 800-222-0131 | firstname.lastname@example.org
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