Hot Housing Market Causes Home Prices Inflation Across Los Angeles
Home prices have been through the roof, medium home prices in April 2021 were $725,000. In March 2021 prices were $680,000 and in April 2020 prices were $550,000, according to the California Association of Realtors.
For some owning a home is considered to be the American Dream, but for California residents, it’s a dream that is getting more and more expensive. The California Association of Realtors reported that prices are up 23.9%, that’s $758,000. The boom the United States is experiencing is due to a simple economic model. Some also are concerned by the new tax overhaul slowing down home sales and sap prices.
Expect Higher Property Taxes in California Due to the Tax Reform
As you can expect higher property taxes in California due to high taxes, and the restriction limits of deducting state and local taxes on federal returns to a limit of $10,000. Provisions in the “tax cuts and jobs act” will offset rising property values threatening homeownership to be less appealing and the incentive to gain homeownership will disappear.
Though the tax reform will especially hurt California; Presidents Geoff Mcintosh states, “Limiting the mortgage interest deduction to $500,000 will no doubt hurt homeownership in states with high housing costs such as California.” A majority of survey respondents – 83% told Realtor.com their plans to purchase a home has changed and 46% said they were concerned or very concerned about the new measure, while 24% say they are positive, or very positive about it.
A majority expressed disapproval of the abolition of tax deductions for wildfire relief, hurricanes, and other losses of casualties.
Also, a majority were feeling negative about raising the federal deficit by $1.5 trillion over the next 10 years. As you can expect higher property taxes in California due to the tax reform. And the restriction limits of deducting state and local taxes on federal returns to a limit of $10,000. Provisions in the “tax cuts and jobs act” will offset rising property values threatening homeownership to be less appealing, and the incentive to gain homeownership will disappear.
30-Year Fixed-Rate Mortgage Will Average From 4.3% to 4.6% in This Next Year
According to Redfin, the next-generation real estate brokerage, in its predictions for the 2021 housing market. In 2018, price increases are expected to be moderate. By next November, the median house price is expected to increase to about $525,000. Los Angeles will rise 3.1% according to MetroStudy. News outlets reported to L.A. County that the housing prices will rise up 3.9% by June 2021.
Home Prices are Going Up
The trend has already begun, and the tax reform will just intensify it. In a survey of 900 homebuyers, a third of respondents stated that they would consider moving to another state. On Redfin’s migration data, its users’ search activity reveals that people are looking to leave expensive coastal cities for more affordable mid-tier cities such as Sacramento, Phoenix, and Atlanta. Though, under current law, single homeowners can omit $250,000 of sale proceeds from capital gains taxes. As long as they’ve lived in their home for two out of the previous five years.
Couples can exclude up to $500,000. Although a new tax-reform plan increases the number of years, to five out of the previous eight years. To mandate deducts gains, this change will incentivize homeowners to continue and stay in their homes longer. Some high-income millennials are forming a new kind of neighborhood—the urban suburb.
“Where you have to drive a couple of miles for a cup of coffee,” said Redfin Kansas City agent Wayne Gray. “We’re talking about neighborhoods outside the city, but still relatively densely populated, with walkable amenities and bikeable commutes.”
The 2021 housing market went by fast, where 25 percent of homes were selling in two weeks or less during the peak of the buying season. And close to 1 in five homes (19%) off-market in less than a week.
More People Living With Roommates
Sellers and buyers remain on the same page when it comes to price, a sale-to-list ratio of 100 percent or above in the most expensive West Coast markets this year.
“In 2017, roommates accounted for 6.6 percent of all households 8,330,000 households’ total, according to Census data. And Redfin analysts believe the trend of more people living with roommates will accelerate in 2018. Due to the lack of affordability combined with new startups aimed at solving the problem.”