I was going to put this in my tax thread but it may have gotten lost. We are currently renting after relocating. I want to get another house. It seems that housing is overpriced right now. Do you think prices will come down if the final plan caps mortgage interest and eliminates SALT?
In my area, I doubt that would happen. Only if Amazon starts feeling unwell…
We bought 2 homes at the “peak of the market.” Made money on both eventually, but the current dwelling will be a $$ loser. We don’t care - as long as we have equity, we are OK. I treat this as an investment into us, not into property. Mr. B was ecstatic the other day when he realized that he can take the bus to get downtown. We are close enough to the “civilization” to enjoy its benefits but far enough that it does not ruin our sleep. Plus, he can tinker with his multiple projects without a landlord breathing down his neck. 
Wow, Bunsen, I hadn’t thought of this, but I HOPE it puts a dent in Seattle home prices. 
It might bring prices down, but probably by less than the reduction in the taxes.
In most parts of the country we have already experienced the bottom of the market. Prices are returning to a more “normal” level so there aren’t too many bargains out there. The passing of the tax plan isn’t going to cause housing prices to drop. If anything, prices will remain stable or even rise if consumers feel more confident because it could increase competition for homes. In high tax states such as NYS, where it looks like you will no longer be able to take mortgage deductions it could slow the market but I don’t think it will cause house prices to drop unless there is currently a large inventory of homes (which is not what I’m reading). You are better off buying now especially if the home has been on the market for a length of time. In many cases, late fall homes have been sitting since the busier real estate season of spring/summer. If that is the case, the buyer is in the best negotiating position.
I think the market is very high right now. If the mortgage deduction is limited and the property tax deduction is eliminated or limited, then absolutely yes – prices will come down. No guarantees in this world, of course. That’s just my opinion.
@VeryHappy I agree market is overpriced. I normally have about 30-35k in itemized deductions, then add another 19k in exemptions. I don’t think people realize how much the loss of personal exemptions will mean. I see my taxes going up maybe 4-5k, that which could impact Home buying decisions for many if you are paying an additional 300-500/mo in federal taxes.
I anticipate DH and I will lose around $20K in deductions, with all the SALT stuff. We don’t have a mortgage, so that will not affect us, but it might affect whoever wants to buy our house. (We’re not looking to move right now, but eventually --)
I think high home prices are due to the rising stock market, lower unemployment and lack of inventory in the re-sale market. And mortgage rates are still pretty low.
Until NYC stops being the financial capital of the world, I don’t see prices in the tri-state area coming down substantially. I think you just need to do your calculations assuming the SALT deductions are gone and buy what you can afford on that basis. We broke even on our first house - even after prices fell in 2008 our house was worth twice what we paid for it, so I think we’re good. But we bought because we loved the neighborhood not as an investment. (But of course we think the neighborhood is the investment.)
If you’re going to carry a mortgage: home prices might go down, but interest rates are very likely to head upwards under the new Fed chief. Thinking back to the mid 1980’s when housing was relatively cheap, but interest rates were 13%. By the time we were ready to buy, home prices had gone up, but interest rates had dropped way down, making it affordable for us.
Due to some of our millennial offspring coming into their house buying years, I don’t think prices will be falling in the areas where they want to live. Other areas that are not so desirable perhaps will fall. But it is enough of a demographic bulge that prices may stay up for a good while.