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.

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January 22, 2019

The Shutdown Effect

Regardless of the fact that the government will not stay shut forever, many analysts are asking whether the shutdown might have a significant negative influence on the economy in the short-run and even some repercussions going forward. Even though back pay will be taken care of, the fact that almost a million workers went without pay for a significant period of time, not only has had a deleterious effect upon individuals, there is a cumulative affect that will reach beyond the workers themselves.

For example, in the real estate industry, there are lenders and landlords who will be receiving late payments. This will cause higher delinquency rates in addition to higher costs. Some buyers may have been delayed in purchasing homes during the shutdown and that means that sellers may have had to delay their plans. Retailers and other service professionals that do business with these workers may have been affected. Farmers are not receiving payments that are designed to off-set the negative effects of the trade war. Even businesses near government tourist attractions such as the National Zoo and museums have felt the pinch.

For those who are affected by the shutdown, this feels like a natural disaster. Only, instead of rebuilding homes after a flood or fire, they are actually rebuilding credit and certain parts of their lives. Will we see a temporary drop in economic growth due to the shutdown? That remains to be seen. However, we can be sure that we will see another drop in confidence in our leaders’ ability to come together and find solutions to the problems we face today.

Scott Robinson, Gateway Mortgage Group





After nearly four years of annual declines in inventory, the number of homes for sale has now increased year-over-year for three straight months. That’s a bit of good news for home shoppers who face less competition as homes stay on the market for longer. But inventory levels are still well below where they were five years ago, and small increases have yet to meaningfully reverse those deficits, according to the November Zillow Real Estate Market Report. A year ago, inventory fell 9.1 percent on an annual basis. Some of the markets that were among the hottest in the country are seeing the biggest increases in available homes, but these are also the places where restricted inventory created more competition for potential buyers. “After years of intense inventory shortages and cutthroat competition, any gains in inventory should be embraced by home buyers. Unfortunately, the small recent gains are not nearly enough to fully erase the existing deficit, nor are they evenly distributed — as there are roughly twice as many homes available for sale in the higher reaches of the market than there are at the lower, more competitive end,” said Aaron Terrazas, senior economist at Zillow. “Rather than calling this a true inventory recovery, it’s probably more accurate to say that inventory levels are no longer in a free fall and are currently bumping along the bottom.” The typical U.S. home is worth $222,800, up 7.7 percent year-over-year. Source: Zillow

Thanks to higher rents throughout much of the year, U.S. renters paid out more in rent than they ever have before. According to a new report from HotPads, U.S. renters paid a record $504.4 billion in rent in 2018, topping 2017’s total by $12.6 billion. That increase is in spite of the fact that there were fewer rental households this year than last year. According to the report, there were approximately 43.2 million renter households in the U.S. this year, nearly 100,000 less than there were in 2017. But despite that decrease, renters still paid out a record high total in rent in 2018, more than the entire GDP of Belgium ($494.7 billion), as rents rose throughout the year. According to the HotPads report, the current median rent is $1,475, up 3% from a year ago. HotPads data showed that rents rose about 3% year-over-year throughout the year, continuing a gradual slowdown in rent appreciation that began in mid-2016. And with rents forecasted to continue growing in 2019, that total will likely increase next year. “After several years of a booming economy, more Millennials became financially able to become home owners in 2018,” Joshua Clark, economist at HotPads, said. “However, rent affordability continues to be a challenge, as those who still rent are paying even higher prices now than they were a year ago,” Clark continued. “If interest rates continue rising in 2019, more would-be homebuyers may decide to continue renting, which could put additional pressure on rent prices,” Clark added. Source: HousingWire

Self-employed people, with a lack of pay stubs or W-2’s, may find it hard to have their income verified when it comes time to get a home loan. According to the Urban Institute, self-employed people constitute nearly 10 percent of the nation’s workforce and earn more on average than salaried workers, but these workers were hit hardest during the recession, and many are still struggling to gain homeownership. Urban Institute looked at how policymakers such as the Bureau for Consumer Financial Protection (BCFP) may improve these potential buyer’s situations. Urban Institute notes that the January 2019 review of Dodd-Frank should focus partly on the inadequate residential loan market for self-employed households. Despite their higher income, these households were hit harder by the financial crisis and have been slower to recover, and Urban Institute notes that many have not returned to their pre-crisis income levels. “But part of it reflects the reality that at any income level, both home loan use and the homeownership rate for self-employed households have declined more than they have for salaried households,” Urban Institute states. However, non-QM loans are aiming to fill this gap. According to industry estimates, Non-QM loans currently represent around 3 percent of the market and are expected to double in size. Source: DS News