Erin Beck

(805) 708-0446

Karen Spechler

(805) 563-4074

SANTA BARBARA SOUTH COAST YEAR END UPDATE 2017

SANTA BARBARA SOUTH COAST YEAR END UPDATE 2017

Happy New Year! Sadly it has not been happy so far with the major disaster in Montecito.  Our hearts are broken for the loss of life, including a special friend/colleague, and also the loss of so many homes. As of this writing there are still people missing and it’s hard to be back to business as usual.

I am going to focus on the new tax law that was just recently passed and let you know how it could impact Real Estate. Please feel free to check in with me if you have any questions.

1. Lower mortgage interest deduction could keep high-end buyers on the sidelines. The new tax law, which is now in effect, lowers the amount of interest on mortgage debt that can be deducted to $750,000 — down from $1 million. That makes it more costly for buyers of expensive homes to borrow. Plus, the mortgage interest deduction is less valuable under the new tax code. In order to take the deduction, homeowners must itemize. But because the standard deduction has increased to $24,000 for couples, fewer people are expected to. The smaller cap means only 14.4% of homes are worth enough to make itemizing advantageous, according to Zillow. Shrinking tax breaks could force sellers to factor that into their asking price. The lower cap applies to new mortgages. That means mortgages closed before December 15, 2017 are subject to the old $1 million threshold, which could mean homeowners with mortgages above $750,000 have less incentive to trade up to a bigger home, adding more pressure to the already tight housing supply.

2. Property tax cap makes buying less attractive. The new tax law also places a $10,000 cap on the amount of state and local property taxes — plus income or sales taxes — filers can deduct. Real estate agents in high-taxed markets frequently tout the ability to write off property taxes to potential buyers. But that selling point won’t be as strong as it used to be. More than four million Americans pay more than $10,000 in property taxes alone. By setting a $10,000 cap nationwide, you are placing high-cost markets on the same plane as low or middle-cost markets. Every homeowner has a dollar amount they can afford or want to spend on a purchase. The more these other costs rise, the less room there is for payment of principal and interest.

3. Home loans could get more expensive. Experts also worry that adding an influx of cash through tax cuts while the economy is at full employment could increase inflation pressure, which may lead the Federal Reserve to increase interest rates, sending mortgage rates higher. Mortgage rates have been sitting below 4% since mid-July, which has helped offset the rise in home prices. But if rates move higher, borrowing becomes more expensive, putting high-cost homes out of reach for many buyers.

HOMES & PUDS

2017 2016 2015 DIFF%
Active Listings 1406 1423 1385 -1.2%
Total Sales 1179 1115 1138 +5.7%
Median Sales Price $1250000 $1149000 $1100000 +8.8%

CONDOMINIUMS

2017 2016 2015 DIFF%
Active Listings 476 552 630 -8.8%
Total Sales 426 423 554 +0.7%
Median Sales Price $630500 $603000 $597500 +4.6%

 

Let Me Orchestrate Your Next Move

Karen Spechler, Broker
#1 in Sales in Santa Barbara for 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002,
2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, & 2017
(805) 563-4074
[email protected]
www.karenspechler.com
DRE License 00552664

 

 

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