Insight For The 2019 Housing Market

The economy and the real estate market go hand in hand. If the housing market cools then the financial sector is hit with an ice storm. Last year the housing market held up while other global economic sectors took a real hit. Forbes outlook on the 2019 housing market marks this year as a crucial year for both US housing and commercial real estate. Here a several reasons why this will be a pivotal year.

The first positive factor is the Opportunity Zones. This program is part of the 2017 Tax Cuts and Jobs Act that was established by President Trump. It is basically a program that offers tax advantages for investors through capital gains tax deferment, capital gains tax reduction and capital gains tax elimination. The Opportunity Zone is an economically-distressed area that both the State where the community resides and the Secretary of the U.S. Treasury deem qualified. It is a great way for a hard hit community to become attractive for economic development. The reason it is good for the 2019 housing market? To make sure and gain the maximum benefit from the program, 2019 is the year an investor will need to purchase making this the crucial time for investors to take advantage of the program.

Secondly, will be the changes to mortgage interest deduction. This will be a sore subject for many American homeowners. With tax season around the corner, many are gathering their information to prepare their taxes. Homeowners will realize the impact of the cap on the mortgage interest deduction. Under the 2017 Tax Cuts and Jobs Act legislation limits the amount of mortgage interest a homeowner could deduct off their taxes. In the past there have been no limits to the mortgage interest deductions for homeowners. Tax deductions have always been an advantage for owning vs. renting. This is still the case, however the advantage has limits now.

Volatility in interest rates can make or break the housing market. The yield on ten-year treasuries rose from 2.47% to 2.67% in 2018 but the ten-year treasury rates dropped from 3.23% to 2.7% as of date. This level of volatility can be looked at as a catalyst for a downturn in the economy. This might make investors, future homeowners and builders shy away from investing a good chunk of change into the housing market. On the other hand, it could force housing to decrease in value making housing more affordable for many.

This leads to the next reason, a slow-down in home price is increasing in coastal markets. In the past 10 years extreme price increases in the housing market have hit in places like New York City and San Francisco. In 2018 however, the increase slowed way down. This little hiccup in the housing market can have its benefits. It can keep the supply of homes on the market in check. If the houses are priced out of most peoples pocket, then they will sit on the market a lot longer causing an oversupply in the market.

The last reason and one of the biggest is the rest of the economy. The affect from the slow down in other economic sectors and the government shut down will definitely play a part in the 2019 housing market.

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