{"id":1453,"date":"2018-01-01T16:16:13","date_gmt":"2018-01-01T16:16:13","guid":{"rendered":"https:\/\/cranbrookloans.com\/?p=1453"},"modified":"2018-01-01T16:16:13","modified_gmt":"2018-01-01T16:16:13","slug":"stellar-home-sales-and-tax-bills-effect-on-housing-newsletter-01012018","status":"publish","type":"post","link":"https:\/\/mortgageoriginator.org\/traceykrol\/2018\/01\/01\/stellar-home-sales-and-tax-bills-effect-on-housing-newsletter-01012018\/","title":{"rendered":"Stellar Home Sales and Tax Bill&#8217;s Effect on Housing Newsletter 01012018"},"content":{"rendered":"<div>\n<div class=\"article-title\">Revisiting Stellar Home Sales and Tax Bill&#8217;s Effect on Housing<\/div>\n<div class=\"article-date\">\n<div class=\"article-descriptor\">\n<div>\n<table>\n<tbody>\n<tr>\n<td width=\"14px\"><\/td>\n<td>Weekly Newsletter<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<p>Dec 29, 2017 3:37 PM\u00a0ET\u00a0<i class=\"fa fa-print fa-lg\"><\/i><\/div>\n<div class=\"article-body\">\n<p>There were several interesting developments with relevance to the housing market last week.\u00a0 Rather than let\u00a0important information fall by the wayside amid the holiday season, this week&#8217;s newsletter will largely be a reprint of last week&#8217;s.\u00a0 Interest rate discussion is updated to reflect this week&#8217;s changes, as is the calendar of economic reports and the list of additional news stories.\u00a0 In order to see the economic calendar or news links in the previous newsletter, you can\u00a0<a class=\"mktnews-newsletter\" title=\"12\/22\/17 - Newsletter: Home Sales Just Crushed Forecasts.  Will Taxes Change The Tune?\" href=\"http:\/\/housingnewsletters.com\/cranbrook\/article\/5a3d79a7e3232a044ce13737\" target=\"_blank\" rel=\"noopener\">view it directly<\/a>.<\/p>\n<p>The tax bill that has been at the center of discussion for the Housing Market was officially signed into law last week. In the days leading up to that, both New and Existing Home Sales\u00a0<strong>surged<\/strong>\u00a0to post-crisis records. Can the new tax policies coexist with a strong housing market?<\/p>\n<p>In a word:\u00a0<strong>yes<\/strong>.\u00a0 While there were some provisions in earlier drafts of the tax bill that would have made this question harder to answer, they didn&#8217;t make the final cut.\u00a0\u00a0<strong>Specifically:<\/strong><\/p>\n<ul>\n<li><strong>Capital Gains on Sale of Primary Residence.\u00a0\u00a0<\/strong>As long as you&#8217;ve lived in your primary residence\u00a0for any 2 of the past 5 years, you can still exclude capital gains on the sale of\u00a0that home, up to $500,000 for joint filers ($250k otherwise).\u00a0\u00a0As recently as last week, the bill would have changed that time requirement to 5 of the past 8 years&#8211;something that could have greatly inhibited housing turnover.<\/li>\n<li><strong>Mortgage Interest Deduction.<\/strong>\u00a0 In the initial draft of the bill, interest would have only been deductible on the first $500k of your loan balance.\u00a0 That number rises to\u00a0$750k in the final bill (still lower than the 2017 limit of $1m).\u00a0 Any &#8220;acquisition indebtedness&#8221; (debt\u00a0that can be traced back to the purchase of the home) that existed or that was under contract to exist as of 12\/15\/2017 will continue to enjoy the $1m limit.\u00a0 This applies to refinances as well, as long as the new loan is only refinancing acquisition indebtedness.\u00a0 To be clear, that means you cannot\u00a0 write off additional interest that results from a cash-out refinance.\u00a0 Interest on Home Equity Lines of Credit (HELOCs) is no longer deductible, even on existing HELOCs, except those used as purchase money (up to $100k).<\/li>\n<li><strong>State and Local Taxes.\u00a0\u00a0<\/strong>An initial draft of the bill completely killed state and local tax (SALT) deductions, including those for property taxes.\u00a0 The final bill added $10k back.\u00a0 This might seem like plenty, but in some states, like New Jersey, it&#8217;s only slightly above average for property taxes alone!\u00a0 In states with a high combination of income and property tax, this $10k limit could have some effect on homebuying decisions, but it would have to be considered against the much larger &#8220;standard deduction.&#8221;\u00a0 Many taxpayers that had been itemizing deductions in these areas are now expected to opt for the standard deduction.<\/li>\n<\/ul>\n<p>All in all, this is a storm that the housing market\u00a0<strong>can<\/strong>\u00a0weather.\u00a0 It&#8217;s ability to do so was only reinforced by\u00a0<strong>EXCEPTIONALLY strong<\/strong>\u00a0sales figures this week.\u00a0\u00a0<a class=\"mktnews-news\" title=\"12\/22\/17 - News: New Home Sales Stellar, Despite October Revision\" href=\"http:\/\/housingnewsletters.com\/cranbrook\/article\/5a3d273536cb2816947e86c2\" target=\"_blank\" rel=\"noopener\">New Home Sales<\/a>\u00a0stood out as the biggest winner, rising a whopping 17.5 percent in November.\u00a0 This isn&#8217;t merely\u00a0good in the &#8220;post-crisis&#8221; context.\u00a0 It puts New Home Sales back in a &#8220;high average&#8221; historical range.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/a.marketnewsletters.com\/assets\/5a3d604ce3232a1d38440b8a\/5a3d604ce3232a1d38440b8a.png\" alt=\"2017-12-22 NL1\" width=\"502\" height=\"766\" \/><\/p>\n<p><a class=\"mktnews-news\" title=\"12\/20\/17 - News: Existing Home Sales Post Largest Gains Since 2015\" href=\"http:\/\/housingnewsletters.com\/cranbrook\/article\/5a3a8a1c36cb281694622b5f\" target=\"_blank\" rel=\"noopener\">Existing Home Sales<\/a>\u00a0may not have surged quite as much as New Home Sales, but they too hit\u00a0<strong>post-crisis highs<\/strong>.\u00a0 Moreover, they&#8217;re in a much stronger spot in the context of the historical trend.\u00a0 The chart below shows plenty of room to weather any effects from new tax policy without exiting a healthy growth trend.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/a.marketnewsletters.com\/assets\/5a3d63e6e3232a1d38440b8e\/5a3d63e6e3232a1d38440b8e.gif\" alt=\"2017-12-22 nl5\" width=\"504\" height=\"371\" \/><\/p>\n<p>Construction metrics (Housing Starts and Building Permits)\u00a0<a class=\"mktnews-news\" title=\"12\/19\/17 - News: Homebuilding Activity Stronger Than Forecast \" href=\"http:\/\/housingnewsletters.com\/cranbrook\/article\/5a39280736cb2816945321a6\" target=\"_blank\" rel=\"noopener\">weren&#8217;t quite as balmy<\/a>\u00a0as the sales data, but positive trends remained decisively intact.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/a.marketnewsletters.com\/assets\/5a3d6054e3232a1d38440b8b\/5a3d6054e3232a1d38440b8b.png\" alt=\"2017-12-22 NL2\" width=\"519\" height=\"775\" \/><\/p>\n<p>With respectable construction activity and home sales booming, it&#8217;s no surprise to see\u00a0<a class=\"mktnews-news\" title=\"12\/18\/17 - News: Faith in New Home Market at 18-Year High\" href=\"http:\/\/housingnewsletters.com\/cranbrook\/article\/5a37e13c36cb2816944541db\" target=\"_blank\" rel=\"noopener\">builder confidence<\/a>\u00a0also exploring a new post-crisis high.\u00a0 In fact, more than any of the week&#8217;s other housing-related reports, the NAHB Housing Market Index did the most to return\u00a0<strong>near all-time highs<\/strong>.\u00a0 This should be taken with a grain of salt, however, due to the nature of survey data, which tends to oscillate in a steadier range when compared to something like outright sales counts.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/a.marketnewsletters.com\/assets\/5a3d605ae3232a1d38440b8c\/5a3d605ae3232a1d38440b8c.png\" alt=\"2017-12-22 NL3 NAHB\" width=\"506\" height=\"775\" \/><\/p>\n<p>Other than the uncertainties surrounding the tax bill, the\u00a0<strong>only other cloud<\/strong>\u00a0on last week&#8217;s horizon was a fairly abrupt increase in mortgage rates.\u00a0 This resulted from\u00a0the uncommonly light trading environment that exists at the end of December (and NOT from the tax bill).<\/p>\n<p>The yield curve (the spread between longer and shorter-term rates, such as 10yr and 2yr Treasury yields) has been a key consideration for traders in 2017.\u00a0 Last week&#8217;s rate spike was immediately preceded by a bounce at a\u00a0<strong>post-crisis record low<\/strong>\u00a0for the 2yr vs 10yr yield curve.<\/p>\n<p>&#8220;Uncommonly light trading environments&#8221;\u00a0<strong>work both ways<\/strong>, thankfully, simply because they amplify the effects of imbalances (rates move more than they otherwise would).\u00a0 This week, the imbalance was in our favor.\u00a0 The yield curve returned to those long-term lows and rates followed.\u00a0 As such, we&#8217;re set to begin January with rates well-within their range from Q3-2017.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/a.marketnewsletters.com\/assets\/5a46a08ce3232a14505a6017\/5a46a08ce3232a14505a6017.png\" alt=\"2017-12-29 nl1\" width=\"500\" height=\"345\" \/><\/p>\n<\/div>\n<\/div>\n<div class=\"calendar-section\">\n<div class=\"calendar-content\">\n<h4><strong>Recently Released Economic Data<\/strong><\/h4>\n<table class=\"table calendar-table\">\n<thead>\n<tr>\n<th width=\"50\">Time<\/th>\n<th width=\"220\">Event<\/th>\n<th class=\"hidden-xs\" width=\"50\">Period<\/th>\n<th>Actual<\/th>\n<th>Forecast<\/th>\n<th>Prior<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td class=\"calendar-date\" colspan=\"6\">Tuesday, Dec 26<\/td>\n<\/tr>\n<tr>\n<td>9:00<\/td>\n<td class=\"description\">CaseShiller 20 yy (% )\u00a0<i class=\"fa fa-star-o\"><\/i><\/td>\n<td class=\"hidden-xs\">Oct<\/td>\n<td>6.4<\/td>\n<td>6.3<\/td>\n<td>6.2<\/td>\n<\/tr>\n<tr>\n<td>9:00<\/td>\n<td class=\"description\">CaseShiller 20 mm nsa (%)<\/td>\n<td class=\"hidden-xs\">Oct<\/td>\n<td>0.2<\/td>\n<td>0.4<\/td>\n<td>0.4<\/td>\n<\/tr>\n<tr>\n<td class=\"calendar-date\" colspan=\"6\">Wednesday, Dec 27<\/td>\n<\/tr>\n<tr>\n<td>10:00<\/td>\n<td class=\"description\">Pending Home Sales (%)\u00a0<i class=\"fa fa-star-o\"><\/i><\/td>\n<td class=\"hidden-xs\">Nov<\/td>\n<td>0.2<\/td>\n<td>-0.4<\/td>\n<td>3.5<\/td>\n<\/tr>\n<tr>\n<td>10:00<\/td>\n<td class=\"description\">Pending Sales Index<\/td>\n<td class=\"hidden-xs\">Nov<\/td>\n<td>109.5<\/td>\n<td><\/td>\n<td>109.3<\/td>\n<\/tr>\n<tr>\n<td>10:00<\/td>\n<td class=\"description\">Consumer confidence\u00a0<i class=\"fa fa-star\"><\/i><\/td>\n<td class=\"hidden-xs\">Dec<\/td>\n<td>122.1<\/td>\n<td>128.0<\/td>\n<td>129.5<\/td>\n<\/tr>\n<tr>\n<td class=\"calendar-date\" colspan=\"6\">Thursday, Dec 28<\/td>\n<\/tr>\n<tr>\n<td>8:30<\/td>\n<td class=\"description\">Jobless Claims (k)<\/td>\n<td class=\"hidden-xs\">w\/e<\/td>\n<td>245<\/td>\n<td>240<\/td>\n<td>245<\/td>\n<\/tr>\n<tr>\n<td>9:45<\/td>\n<td class=\"description\">Chicago PMI\u00a0<i class=\"fa fa-star\"><\/i><\/td>\n<td class=\"hidden-xs\">Dec<\/td>\n<td>67.6<\/td>\n<td>62.0<\/td>\n<td>63.9<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h4><strong>Upcoming Economic Data<\/strong><\/h4>\n<table class=\"table calendar-table\">\n<thead>\n<tr>\n<th width=\"50\">Time<\/th>\n<th width=\"220\">Event<\/th>\n<th class=\"hidden-xs\" width=\"50\">Period<\/th>\n<th>Forecast<\/th>\n<th>Prior<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td class=\"calendar-date\" colspan=\"6\">Wednesday, Jan 03<\/td>\n<\/tr>\n<tr>\n<td>10:00<\/td>\n<td class=\"description\">ISM Manufacturing PMI\u00a0<i class=\"fa fa-star\"><\/i><i class=\"fa fa-star\"><\/i><\/td>\n<td class=\"hidden-xs\">Dec<\/td>\n<td>58.2<\/td>\n<td>58.2<\/td>\n<\/tr>\n<tr>\n<td class=\"calendar-date\" colspan=\"6\">Thursday, Jan 04<\/td>\n<\/tr>\n<tr>\n<td>8:15<\/td>\n<td class=\"description\">ADP National Employment (k)<i class=\"fa fa-star\"><\/i><i class=\"fa fa-star\"><\/i><\/td>\n<td class=\"hidden-xs\">Dec<\/td>\n<td><\/td>\n<td>190<\/td>\n<\/tr>\n<tr>\n<td>8:30<\/td>\n<td class=\"description\">Jobless Claims (k)<\/td>\n<td class=\"hidden-xs\">w\/e<\/td>\n<td>240<\/td>\n<td>245<\/td>\n<\/tr>\n<tr>\n<td class=\"calendar-date\" colspan=\"6\">Friday, Jan 05<\/td>\n<\/tr>\n<tr>\n<td>8:30<\/td>\n<td class=\"description\">Non-farm payrolls (k)\u00a0<i class=\"fa fa-star\"><\/i><i class=\"fa fa-star\"><\/i><\/td>\n<td class=\"hidden-xs\">Dec<\/td>\n<td>187<\/td>\n<td>228<\/td>\n<\/tr>\n<tr>\n<td>8:30<\/td>\n<td class=\"description\">Unemployment rate mm (%)\u00a0<i class=\"fa fa-star\"><\/i><i class=\"fa fa-star\"><\/i><\/td>\n<td class=\"hidden-xs\">Dec<\/td>\n<td>4.1<\/td>\n<td>4.1<\/td>\n<\/tr>\n<tr>\n<td>10:00<\/td>\n<td class=\"description\">ISM N-Mfg PMI\u00a0<i class=\"fa fa-star\"><\/i><\/td>\n<td class=\"hidden-xs\">Dec<\/td>\n<td>57.6<\/td>\n<td>57.4<\/td>\n<\/tr>\n<tr>\n<td>10:00<\/td>\n<td class=\"description\">Factory orders mm (%)<\/td>\n<td class=\"hidden-xs\">Nov<\/td>\n<td>1.4<\/td>\n<td>-0.1<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<div>\n<p><b>Event Importance:<\/b><br \/>\nNo Stars = Insignificant \u00a0\u00a0|\u00a0\u00a0\u00a0<i class=\"fa fa-star-o fa-lg\"><\/i>\u00a0Low \u00a0\u00a0|\u00a0\u00a0\u00a0<i class=\"fa fa-star fa-lg\"><\/i>\u00a0Moderate \u00a0\u00a0|\u00a0\u00a0\u00a0<i class=\"fa fa-star fa-lg\"><\/i><i class=\"fa fa-star fa-lg\"><\/i>\u00a0Important \u00a0\u00a0|\u00a0\u00a0\u00a0<i class=\"fa fa-star fa-lg\"><\/i><i class=\"fa fa-star fa-lg\"><\/i>\u00a0Very Important<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Revisiting Stellar Home Sales and Tax Bill&#8217;s Effect on Housing Weekly Newsletter Dec 29, 2017 3:37 PM\u00a0ET\u00a0 There were several interesting developments with relevance to the housing market last week.\u00a0 Rather than let\u00a0important information fall by the wayside amid the holiday season, this week&#8217;s newsletter will largely be a reprint of last week&#8217;s.\u00a0 Interest rate &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/mortgageoriginator.org\/traceykrol\/2018\/01\/01\/stellar-home-sales-and-tax-bills-effect-on-housing-newsletter-01012018\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Stellar Home Sales and Tax Bill&#8217;s Effect on Housing Newsletter 01012018&#8221;<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-1453","post","type-post","status-publish","format-standard","hentry","category-blog","entry"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/mortgageoriginator.org\/traceykrol\/wp-json\/wp\/v2\/posts\/1453","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mortgageoriginator.org\/traceykrol\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mortgageoriginator.org\/traceykrol\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mortgageoriginator.org\/traceykrol\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/mortgageoriginator.org\/traceykrol\/wp-json\/wp\/v2\/comments?post=1453"}],"version-history":[{"count":0,"href":"https:\/\/mortgageoriginator.org\/traceykrol\/wp-json\/wp\/v2\/posts\/1453\/revisions"}],"wp:attachment":[{"href":"https:\/\/mortgageoriginator.org\/traceykrol\/wp-json\/wp\/v2\/media?parent=1453"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mortgageoriginator.org\/traceykrol\/wp-json\/wp\/v2\/categories?post=1453"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mortgageoriginator.org\/traceykrol\/wp-json\/wp\/v2\/tags?post=1453"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}