Eye on Santa Fe

The Tax Cuts and Jobs Act – What it Means for Homeowners and Real Estate Professionals

The National Association of REALTORS® (NAR) worked throughout the tax reform process to preserve the existing tax benefits of homeownership and real estate investment, as well to ensure as many real estate professionals as possible would benefit from proposed tax cuts. Many of the changes reflected in the final bill were the result of the engagement of NAR and its members, not only in the last three months, but over several years.






May 27, 2020

Rocks and Hard Places

The current economic environment presents the government with very tough choices. If we open up our economy too quickly, the medical experts tell us that we risk reversing the progress we have seen in fighting the pandemic. That would be a tragedy. On the other hand, if we don’t open up the economy, there will be grave economic repercussions. It is almost like — pick your poison.

Even the government’s economic response to the crisis comes with hard choices. We have already spent or allocated trillions of dollars. And now we are considering more stimulus. No one is arguing that the help is not needed. On the other side of the coin, the government will be forced to borrow this money. Going into the markets to borrow trillions could put upward pressure on interest rates. And we don’t need higher rates right now.

Thus, there are many “rock” and “hard place” decisions to be made. And because of the severity of the pandemic, we don’t have many choices of where to turn, because there is not much room to maneuver between these rocks and hard places. And somewhere down the line, we will have to pay for all of this borrowing. That could mean higher taxes, another tough decision for the government.

Scott Robinson, Gateway Mortgage Group


Home Refinancings  may hit a seven-year high this quarter as Americans chase the lowest home-loan rates ever recorded. Refi volume probably will total $429 billion, more than double the $180 billion of the year-ago quarter, according to a Fannie Mae forecast. Homeowners who aren’t among the more than 30 million people who have lost jobs during the pandemic will be eager to lock rates that are the lowest ever recorded, said Keith Gumbinger, a vice president at HSH Associates, a mortgage research firm. While rates have bumped around in recent days, they’re still near the all-time low set late in April that broke the old record set in early March, Gumbinger said. Many homeowners are sitting on an equity cushion after several years of hefty home-price gains that will help them meet stricter standards being imposed by lenders, he said. The median price of an existing home rose 8% year-over-year to $280,600 in March, the National Association of Realtors said. “We keep touching these record lows, and for folks who are reasonably well aligned with changing underwriting standards, there’s a good opportunity here to free up some cash,” Gumbinger said. “If someone saves a few hundred dollars a month by locking in at a lower rate, that’s money that’s typically spent into the economy, supporting economic growth,” Gumbinger added. For the year, refinancing volume probably will total $1.4 trillion, the highest since 2012, according to Fannie Mae. Origination volume for purchase loans likely will total $1.1 trillion, the lowest since 2016, the forecast said. Source: HousingWire — Interested in seeing whether these low rates represent an opportunity to refinance or purchase a home? Contact us for a short consultation.

Realtor.com now expects that home sales in the U.S. will rebound in the late summer and early fall as fears of the coronavirus begin to cool down, before experiencing a downturn again later in the year. The real estate site released a new housing forecast, which predicts that despite an uptick in transactions during the third quarter, largely from Millennials, home sales will be down 15% year over year. According to the forecast, home prices will flatten nationally as demand shifts to secondary markets, where prospective buyers find more affordability and space. The site also predicts that a second wave of coronavirus infections may happen later this year, driving home sales down even further during a time when home sales typically fall anyway. “The path forward for home sales will resemble a W shape with homes sales rebounding in July, August, and September as fears of the coronavirus taper off and buyers return to the market to make up for the lost spring homebuying season before dipping again in the final months of the year as virus infections spike again and the lingering impact of the high unemployment rates are felt,” the real estate site said in a release. The forecast also predicts that mortgage rates will drop to new record lows – below 3% – by the end of 2020. The  realtor.com forecast predicts that housing inventory will remain low, as sellers are going to stay put and housing starts will decline. Source:  Realtor.com

Some states are lifting its stay at home orders. Does this mean a return to business as usual for the industry?  Realtor.com reports that the easing of restrictions has already resulted in a small boost to the number of listings coming online as well as a slight uptick in the numbers of prospective buyers shopping around. There’s a clear link between the extent of the stay-at-home orders and the amount of buyers and sellers in the real estate market,” says Javier Vivas,  realtor.com’s director of economic research. “The markets that reopen will see more listings come back onto the market. And then very shortly after that, we’ll see more buyers at open houses.” Vivas said that states that have allowed more businesses to reopen, inventory is beginning to trickle back onto the market again, even if just by a little. One of the biggest issues facing the national housing market is the lack of homes for sale. The easing of restrictions may also give both buyers and sellers a psychological boost, too. Vivas said: “When you get a sense that things are back to normal, [there could be] an initial boost of energy in the housing market.” Source: Rise and Shred