Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

December 21, 2017 | GOP Tax Plan – ‘Net’ Implications!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian: http://kingdomecon.wordpress.com.

My assessment of the GOP tax plan is based on netting out all the positives and negatives. Yes, there are many positives for wage/rent owners and such. But the Big Trends are what I focus upon.  As real estate goes so goes the overall plan for our economy. That is my general overall perspective. When real estate ‘values’ go Up and Up then our overall economy booms with confidence. So what does the new GOP tax bill do for real estate ‘values’? My core sense is that real estate will suffer under this new GOP plan. Listen to the following videos for more evidence!

 

My sense (after some 50 years in this profession) is that ‘values’ (for most real estate properties) will now start a decline process. Affordability is getting squeezed as interest rates increase and as the Fed continues with this trend of increasing ‘interest rates’ this will further depress real estate ‘values’. A buyers market could start in 2018 and 2019. Sellers could suffer from a general ‘decline’ in values. The Big Cities could suffer the most!

 

The GOP tax bill does create a ‘negative’ for real estate IMO. Higher valued properties will suffer first and then the middle and lower valued properties will follow. The key factors are tax related (less tax advantages for sellers and less affordability for buyers). This must depress ‘values’ over time and this will create a growing sense that real estate is a negative going forward. Does this mean that the overall economy will also suffer?

 

My sense is that confidence is mostly affected by property ‘values’ and their trend. This does mean that the overall economy will suffer in 2018 and 2019 from the current policy decisions. The biggest factor is this change in ‘interest rates’ which directly affects affordability. Then the negatives on deductions for the high income property owners will trickle down to all sectors within real estate.

 

So does the trend in real estate (values) create the general mood for the overall economy? It has in the past (mostly). The 2008 downturn was mostly a result of a change in confidence within the real estate sector. As I think back in my history, I find that as real estate (values) go…so goes the overall economy. The many positives of this GOP tax bill could be offset by what will happen within the real estate sector. That is my overall view as of today! Think for yourself! I am: https://kingdomecon.wordpress.com.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

December 21st, 2017

Posted In: Kingdom Economics

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.