Even for those who’ve grown accustomed to turbo-paced news cycles, 2017 was a year for the ages. There were the daily tweet blasts and nightly cable news headlines of the Trump administration; North Korean leader Kim Jong Un‘s increasingly ominous threats and missile launches; and the #MeToo campaign, which has led to an endless parade of firings of powerful men in media, movies, politics, and just about everywhere else.
But as we’re fond of saying, most roads lead to housing—and indeed, many of the year’s biggest political, economic, and natural-disaster stories have had big ramifications for housing markets. So let’s cut through the clutter! What were 2017’s most noteworthy stories in residential real estate—and the ones you need to watch for in 2018?
Unless you’ve been avoiding all contact with the outside world, you probably know that the GOP has been hard at work revamping the current tax code, and the latest is that Republicans from the Senate and House of Representatives have agreed on a compromise bill. This version must be voted on by the full House and Senate, likely next week.
For some Americans, the Tax Cuts and Jobs Act will mean more money in their pockets each year. But others, particularly those living in pricier coastal states, could lose out.
The new tax code will shake up many of the existing tax brackets, roughly double the standard deduction, and do away with the personal exemption and other popular write-offs.
With a higher standard deduction and fewer deductions available, fewer folks are likely to itemize their tax bills—and the impact on homeowners could be dramatic. The compromise bill is expected to cap the mortgage interest deduction at $750,000. This splits the difference between the Senate and House versions.
If the compromise bill passes the House and Senate, President Donald Trump must sign it into law. Trump hopes to do so before Christmas.
The deadliest wildfires in California’s history have so far resulted in at least 45 deaths, tens of thousands of damaged homes, and billions of dollars in insurance claims.The blazes made headlines in October as they swept through California’s wine country, torching homes, businesses, and even vineyards. Two months later, new fires erupted farther south, hitting highly inhabited counties in Los Angeles and San Diego. As of Monday, the infernos were larger than New York City and Boston combined.
These were already exceedingly tight housing markets with not nearly enough homes to go around. So instead of home prices dropping, they’re actually going up in the heart of wine country. And with fires still burning in Southern California, it’s hard to know what will ultimately happen with prices in those affected areas.
In March, former neurosurgeon (and presidential candidate/motivational speaker) Ben Carson took the reins as new head of the U.S. Department of Housing and Urban Development—and now big changes are afoot. The 2018 budget proposal aims to slash $4.3 trillion in government spending overall in the next decade. About $6.2 billion is slated to be lopped off HUD’s annual budget—which housing advocates fear could hurt the nation’s poorest Americans.
On the block are programs that create more affordable housing and help low-income Americans become homeowners. Less assistance for the lowest-income renters is also expected.
Carson has, however, pledged to make housing healthier. He plans to expand a program focused on eliminating lead poisoning in children. He also aims to make it easier for first-time and younger home buyers to receive Federal Housing Administration assistance on condominiums and other types of housing. So stay tuned.
Devastating hurricanes walloped Texas, Florida, Puerto Rico, and many Caribbean islands this year. In August, Hurricane Harvey deluged Houston, killing about 94 Texans, according to the Texas Department of State Health Services.
In September, Hurricane Irma hit Florida, claiming more than 130 lives. About a quarter of the homes in the Florida Keys were estimated to have been destroyed.
That same month, Hurricane Maria barreled into Puerto Rico, ravaging the U.S. territory and killing 64, according to the island’s Department of Public Safety. Many islanders are still without power or running water. Federal Emergency Management Agency assistance to island residents has topped $1 billion.
The storms have damaged or destroyed hundreds of thousands of homes, putting renters and homeowners into precarious situations as they seek shelter while battling it out with their insurance companies. The rebuilding is likely to take years, rental prices are likely to soar, and the rebuilding will take many years.
Amazon dropped a bombshell in September when the Seattle-based behemoth announced it will be building a second headquarters somewhere in North America. The new HQ will employ as many as 50,000 workers with a median annual salary of $100,000. Oh, and cities are welcome to submit their bids. Let the frenzy ensue!
Nearly 240 metros turned in their proposals to become Amazon’s second home, and to capture the $38 billion that the company estimates will be contributed to the local economy.
Amazon is sure to have a profoundly transformative effect on the housing market of whatever city it lands in. A well-timed real estate investment now could make you a fortune. Do you have a Magic 8 Ball handy?
Self-driving cars are finally becoming a reality in some of the nation’s biggest cities. And these vehicles will do more than just disrupt the automotive space—they’re also likely to upend real estate and life as we know it. They could change where we live (farther away from big urban centers?), what our cities will look like (repurposed public parking spaces!), and even the form and function of our homes (who needs a garage, anyway?). The future is right around the bend.
The economy has recovered from the depths of the financial crisis, and more folks are gainfully employed. So it’s not exactly a shocker that the Federal Reserve had planned to raise its short-term interest rates three times in 2017. But if interest rates are up, then why are mortgage interest rates still hovering around record lows?
It turns out mortgage rates are actually more closely tied to the 10-year U.S. Treasury bond market. Who knew? Bonds are usually considered a safer investment than the more volatile stock market. So when bonds are up, mortgage rates go down.
But the party could be ending. The Fed is expected to raise rates four times in 2018. And mortgage interest rates will likely follow suit and start ticking up.
Will Trump’s promised wall along the U.S.-Mexico border ever become a reality? After his first year in office, there’s only been lots of prognostication over the wall’s probable impact, especially on the poorer U.S. border towns. These communities rely on Mexican shoppers and home buyers to boost their economies. If the new wall discourages or prevents them from coming in, some locals and experts fear jobs could disappear as a result. And that could lead to big declines in home prices.
However, others such as retired cattle rancher Bob Maupin believe it will be good for the region as fewer drug smugglers and gangs will be able to illegally cross the border. If buyers even think that an area is safer, home prices could actually rise.
Oklahoma used to be known as tornado country. But over the past few years, earthquakes have become near-daily occurrences in the north-central swath of the state. They’ve left residents on edge and left cracks in the foundations, walls, and ceilings of their homes.
Scientists blame the local oil and gas industry as new drilling and wastewater disposal methods have triggered the rash of quakes. There were just three earthquakes of a 3.0 magnitude or above in 2009. That rose to more than 900 in 2015 and fell to 623 in 2016, after the state began curbing the dangerous disposal practices. The number has continued to decline this year, and yet the region has still seen a few larger earthquakes.
Local home prices have also fallen, likely as a result.
“I’m madder than hell,” says Johnny Bryant, whose Pawnee home was damaged by a quake that hit 5.8 on the Richter scale. “Every wall has a crack in it, and there’s nails sticking out of my Sheetrock in my bedroom in my wall.”