The Tidwell Report

The House Votes To Kill The Cap on the $10K Real Estate Tax Deduction…and more — The Tidwell Report
December 22nd, 2019

Some great real estate news came out this week.

The House of Representatives voted last week to kill the federal limitation on property tax deductions. This would eliminate the provision that set a $10,000 cap on state and local real estate taxes, which previously could be deducted on your federal tax return. When this cap went into effect, it strangled demand for homes particularly in the mid to high range in Los Angeles neighborhoods.

This bill proposes to double the cap to $20,000 per household for 2019 and to eliminate it completely in 2020 and 2021. It proposes to pay for the change by restoring the top income tax rate to 39.6% from the lower 37% adopted as part of the 2017 tax changes. The Senate now must approve it before it can be sent to the President and the Senate is speculated to vote on it in January. I will follow this closely since it will likely increase demand for homes above $1M.

NOVEMBER CALIFORNIA EXISTING HOME SALES REPORT
The California Association of Realtors reported that:

State-wide existing single-family home sales totaled 402,880 on a seasonally adjusted annualized rate in November, up 5.6% from the number of homes sold last November.
The statewide median price was $589,770, down 2.6% from October, but up 6.4% from November 2018.
The unsold inventory level, the measurement of how long it would take to sell all active listings at the current sales rate, stood at a 3.1 month supply in November, down from a 3.7 month supply one year ago.

On a regional level sales were as follows:
Los Angeles County:

Had a 5.9% increase in the number of sales compared to one year ago.
The median sales price was $594,840, up 7.4% from $553,940 last November.
There was a 2.9 month supply of housing, down from 3.9 months from one year ago.

Ventura County:

Had a 1.9% decrease in the number of sales from one year ago.
The median sales price was $660,000, up 2.5% from $643,740 last November.
The supply of housing for sale was 4.4 months, down from 5.4 months last November.

Orange County:

Had an increase of 6.9% in the number of sales from one year ago.
The median sales price was $822,000, up 3.4% from $795,000 last November.
The supply of housing for sale was 3.1 months, down from 3.9 months last November.

NOVEMBER US EXISTING HOME SALES REPORT:
The National Association of Realtors reported that:

The number of total existing-home sales increased by 2.7% in November from the number of homes sold last November.
The nation-wide median price increased by 5.4%, from November 2018.
The supply of housing stood at a 3.7 month supply, down from 4 months last November.

TREASURY BOND YIELDS
*higher this week*
The 10-year treasury bond closed the week yielding 1.92%, up from 1.82% last week.
The 30-year treasury bond yield ended the week at 2.34%, up from 2.26% last week.
We watch treasury bond yields because mortgage rates often follow bond yields.

MORTGAGE RATES
*unchanged this week*
The December 19, 2019 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows:
The 30-year fixed mortgage rate average was 3.73%, unchanged from 3.73% last week.
The 15-year fixed was 3.19%, unchanged from 3.19% last week.
The 5-year ARM was 3.37%, almost unchanged from 3.36% last week.
Unfortunately, rates rose late in the week. They will be a little higher next week.

STOCK MARKETS
*closed the week at record highs*
Stock markets closed Friday with their 31st record high in 2019. Investors are ending the year with great confidence amid:

last week’s announced preliminary trade deal with China,
a trade deal with Canada and Mexico passing in Congress,
increased economic growth in Asia,
signs of a Brexit deal,
increased retail sales,
strong consumer confidence, and
solid U.S. corporate profits

Not even the impeachment of a U.S President for only the third time in history could dampen investor confidence.

By The Numbers:

The Dow Jones Industrial Average closed the week at 28,455.09, up 1.1% from 28,135.28 last week. It is up 22% year to date.
The S&P 500 closed the week at 3,221.22, up 1.7% from 3,168.80 last week. It is up 28.5% year to date.
The NASDAQ closed the week at 8,924.97, up 2.2%, from 8,734.88 last week. The NASDAQ is up 34.5% year to date.

Happy Holidays!

The Tidwell Report

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