The Wall Street Journal has been a trusted authority for years; but the angle of a recent article should give readers in lending and real estate pause to wonder if the WSJ isn’t veering down the path of other news outlets accused of not-so-authentic reporting. In an article titled, “This Could be the Worst Spring in Years for Home Sales,” reporter Laura Kusisto cites “a new tax law that reduces the incentive for homeownership” as a contributing factor for the article’s bleak prediction.
Lower sales overall have been predicted by multiple, credible industry sources who point to nationwide inventory shortages as a major challenge even as the number of first-time home buyers has stayed above its historical average for the past two years. That said, home sales were in this predicament before the Tax Cuts and Jobs Act passed and Kusisto’s statement is misleading.
It’s easy for consumers to get confused when it comes to housing news – do a Google search for “U.S. median home price” and you’ll see results all over the map. Two well-known names vary wildly: The Federal Reserve Bank of St. Louis (FRED) shows the median home price as $328,600 as of 2-26-18, while Zillow shows it to be $207,600 as of 1-31-18.
Regardless of which you believe, both numbers refute the WSJ article claim that changes in mortgage interest deductibility reduce the incentive to buy a home because the loan amounts on either price would fall well within the new law’s deduction limits of $375,000 for single or married filing separately and $750,000 for married couples. With 87% of homes sold in January going for under $500,000 according to the National Association of Realtors (NAR), most buyers could likely qualify for the tax break; however, the Tax Foundation notes that only about 1/3 of Americans itemize their taxes and take the mortgage interest deduction.
We’ll never know for sure whether reporters and news outlets are pushing an agenda or simply don’t understand the nuances of the housing market when they publish or broadcast statements like Kusisto’s. We do know that commentary like that easily and often leads to hastily-formed opinions and fears that make their way to water cooler and happy hour conversations.
Consumer education is critical for your prospects to counter misinformation that could keep a qualified buyer from reaping the benefits of homeownership. Additionally, updates and opportunity alerts for your past clients can help them stay on top of their equity position, mortgage performance and options as they try to advance their long-term plans. Are you reaching out to your prospects and past clients regularly with compelling, relevant information? The mainstream media is…