Condo prices will continue to drop
Condo prices will continue to their slide from 2017, Given that the supply of luxury condos on the market currently exceeds two years and sales remain slow especially the new condos in the urban core that were all bought in a bullish market, while those buyers are now trying to offload in a bearish market.
However Condos listed at $600,000 or below, as well as single-family homes in every price range, signs are pointing up for 2018,
Condo glut at recession levels
“At the end of November 2017, we have five years worth of condo inventory over $1 million in the market,” This is the highest total in one month since the recession in 2008.”
That figure includes condos currently under construction and condos that have hit the resale market. This has forced sellers to recalculate their listings, dropping prices by double-digit percentages. “The average price reduction is around 19 percent.
The New Tax Law
There were essentially three changes in the new tax law that will have some amount of impact on real estate costs:
1) SALT Deduction - Why people from NYC and SFO need to move to Miami
Previously, taxpayers were able to deduct state and local property and income taxes from their Federal tax return. This still remains the case but is now limited to a cap of $10,000. It seems this will primarily impact high-income individuals or those with more expensive homes (and higher property taxes).
2) Mortgage Interest Deduction
The mortgage interest deduction is now limited only to the interest on a loan of up to $750K (formerly $1M).
3) Increase in Standard Deduction
A potentially more significant impact on how homeowners file taxes is the increase in the standard deduction to $12K for individuals and $24K for joint filers.
Individuals looking to purchase investment properties have a lot to like with the new tax plan. The limitations on property tax and mortgage interest deductions do not apply to investment properties as investors can still use those expenses when calculating their net rental income or their basis for capital gains (thereby reducing the amount of tax they pay).
Furthermore, the new plan provides some additional deductions for pass through real-estate holding businesses.
*Disclaimer - we are not tax professionals - please seek any personal tax advice from your favorite CPA”