How Will the New Tax Regulations Affect Prices?

As you can imagine, another question we've been asked a lot recently is the implications of the new tax law on the real estate market.  First, even the experts have acknowledged that the ultimate impact is still opaque.  As we  learn more from them we will share their insights, so we need to stress this is a "work in progress." 

Recently two representatives from First Republic Bank Wealth Management came to our office to offer their perspective - with the explicit disclaimer that these are only initial impressions.  We want to offer the same proviso.

Here's a brief summary from the FRB seminar:

The effects of tax reform will be minimal on the under $1M and over $5M price ranges.  Where we could see some price decline (some forecast up to around 10%) is in the $1-5M range.  The reasoning is that buyers below $1M may not itemize their taxes and will fall below the $10K SALT deduction limit.  Above $5M the stock market gains, bonuses and other positive factors, plus the fact that the well-to-do want what they want when they want it, will off-set the new tax implications.

Now here is our own insight.  New Yorkers live in tight circumstances compared to residents of most other places. A marriage, a divorce, a new child - even adopting a stray while owning in a pet-unfriendly building - can trigger a life change which can in turn necessitate a new home.  So if you are considering a life change, give us a call. 

Some buyers and sellers are taking a "wait and see" attitude.  That creates opportunity.  Fewer buyers looking at fewer properties means less competition on both ends.  If you're sitting it out on the sidelines you might want to reevaluate and jump in. 

Of course, we can't say for sure what the effects will or will not be.  Just know that we're keeping a close eye on it.  For advice about your personal situation, talk to your (probably swamped) accountant or financial advisor.