Voice for Real Estate – Conference, Tax Reform, Mortgage Market

House Republican tax reform legislation was introduced as REALTORS® met in Chicago for their 2017 Conference & Expo. NAR opposes the legislation because it will hurt homeowners. Also, a REALTOR® testified before Congress on how to improve the secondary mortgage market.

National Association of Realtors® Outlines Concerns in Advance of Tax Reform Vote

Washington, D.C. – November 14, 2017 (nar.realtor) As a vote on tax reform in the House of Representatives draws near, National Association of Realtors® President Elizabeth Mendenhall will outline how the House and Senate tax proposals are an attack on homeownership and middle-class Americans. Mendenhall will take questions from the media alongside senior NAR Government Affairs staff.

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WHAT: Tax reform media conference call with the National Association of Realtors®

WHEN: Wednesday, Nov. 15, 2017, 2:00 p.m. – 2:45 p.m.

WHO: Elizabeth Mendenhall, NAR President Jamie Gregory, NAR Deputy Chief Lobbyist Evan Liddiard, NAR Senior Policy Representative

HOW: Participant Dial-in: 877-229-8493 (ID code: 117027) OR Streaming Link: https://video.teleforumonline.com/video/streaming.php?client=17027 (link is external)

Event Highlights:

  • Brief opening remarks from NAR President Elizabeth Mendenhall
  • A short presentation from NAR tax counsel Evan Liddiard on the tax proposals
  • Q&A with members of the media

RSVP not required, but appreciated. Please RSVP to Jon Boughtin (jboughtin@realtors.org (link sends e-mail), 202-383-1193) or reach out with questions.

Existing-Home Sales to Grow 3.7 Percent in 2018, but Inventory Shortages and Tax Reform Effects Loom

Chicago, IL – November 3rd, 2017 (PRNewswire) The steadily improving U.S economy, sustained job growth, and rising confidence that now is a good time to buy a home should pave the way for an increase in existing-home sales in 2018, but continued supply shortages, and passage of a tax bill that disincentives homeownership, threaten to handcuff what should be stronger activity. That is according to a residential housing and economic forecast session here at the 2017 REALTORS® Conference & Expo.

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Lawrence Yun, chief economist at the National Association of Realtors®, presented his 2018 housing and economic forecast and was joined onstage by Ken Rosen, chairman of Rosen Consulting Group and UC Berkeley’s Fisher Center for Real Estate and Urban Economics. Rosen addressed the primary causes for the depressed U.S. homeownership rate and shared his proposed ideas, highlighted in a white paper released earlier today, on how to ensure more creditworthy households can enjoy the personal and financial benefits of owning a home.

“Despite considerable demand all year, pending sales have lost a step in recent months because low supply is pushing prices higher and making homebuying less affordable in several parts of the country,” said Yun.

With a few months of data remaining in 2017, Yun estimates that existing-home sales will finish at a pace of 5.47 million – the best since 2006 (6.47 million), but only a modest improvement (0.4 percent) from 2016 (5.45 million). In 2018, sales are forecast to expand 3.7 percent to 5.67 million. The national median existing-home price is expected to rise to around 5.5 percent this year and next year.

Yun and Rosen, however, both cautioned that the House Ways and Means Committee’s release yesterday of its legislative proposal to overhaul the American tax code could very well affect home sales and prices next year and beyond. The tax bill in its current form is a direct tax hike on homeowners and nullifies the homeownership incentive for all but the top 5 percent of tax filers. Earlier this year, NAR released a full analysis of the House Republican blueprint for reform, finding that it could negatively affect home values by about 10 percent and raise taxes on middle-class homeowners by an average of $815.

Much of Yun and Rosen’s presentation focused on the reasons why many would-be buyers are not reaching the market. NAR’s 2017 Profile of Home Buyers and Sellers, released earlier this week, revealed that first-time buyers were only 34 percent of sales over the past year, which was the fourth lowest since the survey began 36 years ago.

Rosen, presenting findings from Rosen Consulting Group’s three white papers released this year on the depressed homeownership rate, said a perverse mix of affordability challenges, student loan debt, tight credit conditions and housing supply shortages continue to hamper many households from owning a home. This is despite extremely low mortgage rates that should be fostering the biggest for-sale housing boom in American history.

“Ownership rates are currently below their peak across the younger age groups and in cities that have seen sharp price increases, and it’s not a good thing,” said Rosen, “A higher rate of homeownership makes sense. It is so important to the financial health of the economy. Homeownership helps households accumulate wealth over time, reduces inequality, increases investments in communities and boosts economic growth.”

According to Yun, the biggest impediment to sales right now and into next year is the massive shortage of supply in relation to overall demand. The lagging pace of new home construction in recent years is further creating a logjam in housing turnover. Without enough new homes on the market, homeowners are typically staying put for a longer period of time before selling, typically 10 years, which is keeping inventory low and hurting affordability.

“The lack of inventory has pushed up home prices by 48 percent from the low point in 2011, while wage growth over the same period has been only 15 percent,” said Yun. “Despite improving confidence this year from renters that now is a good time to buy a home, the inability for them to do so is causing them to miss out on the significant wealth gains that homeowners have benefitted from through rising home values.”

Pointing to Los Angeles and the Bay Area as examples of areas with significant affordability constraints, Yun said unhealthy levels of price appreciation are also occurring in many other markets with strong job growth, but without the commensurate rise in housing starts. As a result, the ability to buy a home has become extremely difficult for even those with well-paying jobs and is forcing households to flee expensive areas in the West and Mountain regions for more affordable parts of the country. This in turn could affect future job growth in these areas and ultimately soften housing demand.

Although Yun forecasts single-family housing starts to jump 9.4 percent to 950,000 next year, this is still below the 50-year average of around 1.2 million starts. New single-family home sales are likely to total 606,000 this year and rise to around 690,000 in 2018.

Rosen agreed with Yun’s remarks that a significant boost in residential construction is needed to improve affordability and increase sales. He explained that the white paper released today, “Rebuilding the American Dream: Strategies to Sustainably Increase Homeownership,” identifies 25 ideas to bolster homeownership. They include: overriding restrictive zoning laws, promoting modular construction [to increase supply], a down payment savings program, tackling the burden of student debt, and a nationwide counseling program for homeowners who previously experienced foreclosure and may be hesitant to consider buying a home again, among others.

“A willingness to embrace new ideas will go a long way towards easing the constraints of low supply, student debt and weaker affordability that are currently suppressing homeownership,” said Rosen.

After two consecutive quarters of economic growth of 3 percent, Yun expects GDP to come in around 2.2 percent for the year and to expand to 2.7 percent overall in 2018, as long as job growth remains solid and residential construction picks up.

With the Federal Reserve unwinding its balance sheet and continuing its plan to slowly raise short-term rates, Yun believes mortgage rates will gradually climb towards 4.50 percent by the end of 2018.

“An overwhelming majority of renters want to own a home in the future and believe it is part of their American Dream,” said Yun. “Assuming there are no changes to the tax code that hurt homeownership, the gradually expanding economy and continued job creation should set the stage for a more meaningful increase in home sales in 2018.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Information about NAR is available at www.nar.realtor. This and other news releases are posted in the newsroom in the “About NAR” tab.

Homeownership a Common Interest, Deserves Protection in Tax Reform Debate

Washington, D.C. – September 14, 2017 (nar.realtor) Tax reform done right could yield savings and simplification that benefits average Americans, but history shows that misguided reforms can pose significant threats to the economy.

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That’s the message the National Association of REALTORS® brought to Congress today as Iona Harrison, chair of NAR’s Federal Taxation Committee, testified (link is external) before the Senate Finance Committee.

At the hearing, titled “Individual Tax Reform,” Harrison told senators that putting homeownership in the crosshairs of tax reform would strike at millions of American households.

“Real estate is the most widely held category of assets that American families own, and for many Americans, it’s the largest portion of their family’s net worth,” Harrison said. “As 64 percent of American households are owner-occupied, we believe that homeownership is not a special interest, but is rather a common interest.”

Over the past year, proposals for tax reform have included the elimination of important benefits like the state and local tax deduction, a near doubling of the standard deduction – which would all but nullify the benefits of the mortgage interest deduction – as well as caps to the MID.

REALTORS® have warned lawmakers that proposals to limit or nullify the tax incentives for homeownership could actually raise taxes on millions of middle class homeowners while putting the value of their homes at risk.

In her testimony, Harrison responded to critics of real estate deductions, who often claim those deductions benefit only a small number of wealthy individuals. Harrison noted:

  • 70 percent of the value of real property tax deductions in 2014 went to taxpayers with incomes less than $200,000
  • 53 percent of individuals claiming the itemized deduction for real estate taxes in 2014 earned less than $100,000
  • 32.7 million tax filers claimed a deduction for mortgage interest in 2015
  • Half of taxpayers with mortgages over $500,000 have AGI below $200,000., according to research conducted for NAR.

To that end, Harrison reminded the committee that tax reform efforts in the late 1980’s were fraught with unintended consequences that delivered a broadside to the economy and only offered brief tax relief.

“When Congress last undertook major tax reform in 1986, it eliminated or significantly changed a large swath of tax provisions, including major real estate provisions, in order to lower rates, only to increase those rates just five years later in 1991,” said Harrison. “Most of the eliminated tax provisions never returned and in the case of real estate, a major recession followed.”

Despite the REALTORS®’ concerns raised during the hearing, Harrison reminded Senators that REALTORS® do support tax reform.

“Homeowners already pay 83 percent of all federal income taxes, and reform that raises their taxes is a failed effort,” said Harrison. “But NAR supports the goals of simplification and structural improvements for the tax system, and individual tax rates should be as low as possible while still providing for a balanced fiscal policy. We simply believe that to achieve these goals, Congress should commit first to doing no harm to the common interest that homeownership provides.”

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact:

Jon Boughtin
(202) 383-1193
Email

Tax Reform Could Deliver a Tax Hike for Homeowners: New Research

Washington, D.C. – May 18, 2017 (PRNewswire) While tax reform proposals swirling around Washington, D.C., promise lower tax bills for American families, new estimates indicate that many middle-income homeowners may actually see a tax increase if those proposals go through.

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The study, “Impact of Tax Reform Options on Owner-Occupied Housing,” illustrates the effects of a tax plan that echoes certain elements of the “Better Way for Tax Reform” or “Blueprint” proposal released last year, as well as the White House tax reform outline released in April, to which the National Association of Realtors® responded.

While most individuals would see a tax decrease under such a proposal, the study estimates that many middle-class homeowners could in fact see a net average tax increase. Homeowners with adjusted gross incomes between $50,000 and $200,000 would see their taxes rise by an average of $815. The study also estimates that combined tax savings from claiming the mortgage interest deduction and real estate property tax deductions would drop 82 percent between the 2018 and 2027 period.

“Tax reform and lower rates are worthy goals, but only if we can achieve them in a fiscally responsible way,” said NAR president William E. Brown, a second-generation Realtor® from Alamo, California and founder of Investment Properties. “Balancing tax reform on the backs of homeowners isn’t an option.”

The study, which was commissioned by NAR and prepared by PwC (PricewaterhouseCoopers), estimates that this tax increase would result from the interaction of several provisions in the reforms under consideration. For many homeowners that currently benefit from the mortgage interest deduction, the elimination of other itemized deductions and personal exemptions would cause their taxes to rise, even if they elected to take the increased standard deduction. For others, the elimination of the state and local tax deduction alone would result in higher federal income taxes.

In addition to increasing taxes on many middle-income homeowners, the report finds that such a proposal could cause home values to fall by an average of more than 10 percent in the near term. In areas with higher property taxes or state income taxes, the drop could be even greater. Although the study doesn’t directly analyze the “Better Way for Tax Reform” plan or the recent White House outline, it examines a proposal with many similar elements.

Those elements include lowering and consolidating marginal tax rates to only three rates, setting a top income tax rate of 33 percent, doubling the standard deduction, eliminating all itemized deductions (other than charitable contributions and mortgage interest) and personal exemptions, eliminating the alternative minimum tax, and capping the tax rate on pass-through business income at 25 percent.

PwC estimated that roughly 35 million households will claim the mortgage interest deduction in 2018, three quarters of which have incomes between $50,000 and $200,000. According to NAR, roughly 70 percent of those eligible for the MID claim it in a given tax year.

“A tax reform proposal that hikes taxes for homeowners is a raw deal, and consumers know it,” said Brown. “Leaders in Washington who are driving tax reform have shown every indication that they have the best of intentions, and we’re hopeful they’ll consider our study as this process plays out in the months ahead.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the “News, Blogs and Video” tab on the website.

Flood Insurance, Tax Reform Top Issues as Realtors® Head to Washington

Washington, D.C. – May 16, 2017 (nar.realtor) Nearly 9,000 Realtors® and industry guests are descending upon Washington this week to address regulators and members of Congress on key industry issues, including national flood insurance, tax reform and sustainable homeownership.

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Realtor® members will visit U.S. House and Senate offices to urge Congress to pass a multiyear reauthorization of the National Flood Insurance Program before it expires on September 30. Additionally, Realtors® are seeking to protect sustainable homeownership by advocating for responsible reform of the secondary mortgage market, prohibiting the use of mortgage guarantee fees for any purposes other than credit-risk management and improving consumer protections for energy efficiency improvement loans.

Realtors® will also be reminding legislators that while Realtors® support tax reform, it cannot happen by diminishing the real estate tax provisions that are an essential component of a vibrant housing market and key driver of the economy.

During the meeting, attendees will also be participating in a series of on-site visits with regulatory agency staff at the Federal Aviation Administration, Federal Emergency Management Agency, U.S. Department of Treasury and the U.S. Department of Veterans Affairs.

“With a new president and Congress in office, it’s vitally important for regulators and policymakers in Washington to hear from the nation’s Realtors® about issues affecting their businesses, communities and clients,” said National Association of Realtors® President William E. Brown, a Realtor® from Alamo, California and founder of Investment Properties, a division of his family real estate business. “Robust commercial markets and helping more Americans achieve the dream of homeownership are things we believe strongly in protecting, which is why we are here this week engaging with our senators and representatives and making our voices heard.”

This year’s meeting, which kicks off today and runs through Saturday, May 20 will also feature nearly 100 conference sessions on hot topics that range from policy to technology. Conference attendees will hear from industry experts and thought leaders, including:

  • Mark Calabria, chief economist to Vice President Mike Pence, who will discuss the market and potential administration changes and their effect on housing.
  • Dr. Ben Carson, secretary, U.S. Department of Housing and Urban Development, who will talk about access to mortgage credit and his priorities for the Federal Housing Administration.
  • John Worth, senior vice president for Research and Investor Outreach, National Association of Real Estate Investment Trusts, who will share the perspectives of publicly listed companies on current developments in commercial markets.
  • Roy Wright, deputy associate administrator for Insurance and Mitigation, Federal Emergency Management Administration, who will discuss the NFIP benefits provided to millions of home and business owners.
  • Lawrence Yun, NAR chief economist, who will share residential and commercial real estate market updates and forecasts.

Recognizing those who play a role in making the Realtors® Political Action Committee among the largest and most bipartisan contributor to candidates, 143 Realtors® will be inducted into the RPAC 2016 Hall of Fame, which recognizes members whose aggregate RPAC investments are at least $25,000. The 2016 class is the largest ever and includes a member who has invested $150,000, the highest in RPAC’s 48-year history. Hall of Fame inductees were recognized onstage during the meetings with a plaque and lapel pin and will have their name inscribed on the Hall of Fame placard on the rooftop of NAR’s D.C. headquarters. The list of 143 inductees is available at www.realtoractioncenter.com/rpachof.

The legislative meetings coincide with Realtors® Advocacy Month, designed to engage and educate Realtors® to vote, act and invest in advocacy issues at all levels of government. Throughout the month of May, state and local associations of Realtors® are sharing their candidate and issue campaign successes, holding voter registration drives or community outreach events, and educating members on issues important to the industry, markets and consumers.

The meeting trade expo will be open Wed., May 17 and Thur., May 18 from 10 a.m.-6 p.m. More than 100 industry-leading companies will demonstrate the latest real estate products and services.

To stay connected with the conference follow the Realtors® Legislative Live blog, live.blogs.realtor.org/, the Twitter hashtag #narlegislative, or find NAR at @nardotrealtor on Facebook and Twitter.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact:

Sara Wiskerchen
(202) 383-1013
Email