USD Economist Predicts Republican Tax Overhaul Will Make It Harder For San Diegans To Buy Homes
Tuesday, December 5, 2017
Photo by Christopher Maue
How Will The Republican Tax Overhaul Affect San Diego Homebuyers?
Norm Miller, real estate finance professor, University of San Diego School of Business
While lawmakers work to patch up differences between the House and Senate versions of the Republican tax bill this week, a local economist says the plan will make it tougher for San Diegans to buy a home.
The tax bill would limit mortgage interest deductions.
“That’s a tax advantage that helps make homes more affordable,” said University of San Diego economist Alan Gin. “We already have really high prices as far as homes are concerned and so it’s going to be even more difficult to purchase homes so I expect the housing market both locally and in the state of California to be adversely affected.”
Gin also said the tax plan’s proposed elimination of deductions for local and state taxes means less money in people’s pockets. He predicts a ripple effect on the economy and a decline in revenue to local governments.
“What’s going to happen is people are going to have less money and if they have less money they’re going to spend less and that could slow the economy,” Gin said.
Californian’s may also see a tax credit for electric vehicles vanish if House Republicans have their way.
“Tesla of California will be adversely affected,” Gin said. “It’s not a huge part of the California economy but it’s a growing part of the economy.”
Gin said the tax overhaul’s winners include people with large estates as well as corporations which will see their tax rate dip from 32 to 20 percent.
“Unfortunately, this is going to make an already bad income distribution situation even worse,” Gin said.
Economist Alan Gin said limiting mortgage interest deductions poses another hurdle for San Diego home buyers who are already grappling with high house prices.
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