Less than half of homebuyers (47 percent) surveyed by Redfin said the overhaul of the tax code impacted their home search.
When Redfin surveyed homebuyers last year, 56 percent said the tax reform package shepherded by Republicans in Congress had an impact on their home search. The tax reform law in part lowered the caps on the tax deductions allowed for mortgage interest payments and state and local taxes.
“Last year more homebuyers were worried that tax reform would hurt their homebuying budgets, but it turns out tax reform wasn’t all bad or all good for homebuyers,” Redfin Chief Economist Daryl Fairweather said in a release. “Some homebuyers, especially in low-tax states, are now paying less in taxes overall, which has left them with more cash for a more expensive home.
“For others, not being able to deduct as much of their property taxes or mortgage interest from their taxable income was the other shoe that needed to drop to make them pick up and move to a more affordable area,” Fairweather said. “In the long run, we will see demand for luxury homes in high-tax states suffer the most because those homes have been hit the hardest by this tax reform, and there's actually early evidence of that already happening.”
Redfin said the most common tax-reform impact reported by homebuyers this year was that they lowered their price range because of decreased benefits on high-priced homes (14 percent, down from 16 percent last year).
According to the survey, New York had the largest share of homebuyers (61 percent) who said that tax reform had impacted their home search; followed by California (55 percent). Kansas and Indiana had the smallest percentage of homebuyers (24 percent each) who said their search was impacted by tax reform.