Written by Kelly Maguire
Through the first six months of 2019, Chicagoland home sales are tracking below 2018 levels, with volume down 6.5% year over year. One factor behind the mid-year slowdown, according to @properties co-founder Thad Wong, is the so-called SALT cap, which put new limits on state and local tax deductions starting in 2018.
Under the new law, taxpayers who itemize are limited to deducting a total of $10,000 of state and local taxes. That means that many homeowners throughout Chicagoland can no longer deduct the full amount of their property taxes – traditionally one of the largest deductions taxpayers could claim. This has effectively increased the cost of homeownership.
To compensate, homebuyers have been driving harder bargains at the negotiating table, and the impact on home prices is being felt by sellers. Home price appreciation has been slowing both locally and nationally, despite the strong economy of the past few years.
Still, Wong remains optimistic. In the third episode of @/The Market, Wong and @properties co-founder Mike Golden note that the median home price for all of Chicagoland was still up through the first six months of the year, compared to the same period last year, despite the drag from SALT.
“If you look at the fact that the market [pricing] is relatively flat, it’s a win given the tax changes we’ve faced,” said Golden.
Wong adds that there’s reason to embrace a slowing market. “It feels like the market is taking a breather [which is healthy after the growth we’ve seen].”
Watch the video below for more insights and analysis. For more information about your local market, be sure to contact an agent.