Majority of Homeowners and Renters Benefiting from the Tax Cuts and Jobs Act

Tax
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We believe that the Tax Cuts and Jobs Act (TCJA) will likely impact housing as follows:

  • More entry-level home buying in most areas of the country
  • Higher rents, since tenants now have more disposable income
  • Acceleration in Southern migration

We ran the math for a typical two-person married renter and owner household in all of the major metropolitan areas in the country1 and learned that in 2018 the TCJA resulted in:

  • Renters paying $2,716 less in taxes , ranging from $1,918 less in Miami to $5,214 less in San Jose
  • Homeowners paying $1,508 less in taxes , with San Jose and San Francisco homeowners actually paying more in taxes and Nashville homeowners paying $2,335 less in taxes
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Conclusion: Buy rentals in San Jose because 1) renters are getting richer and 2) they have less incentive to buy a home.

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Rent everywhere is increasing gradually :grinning:
In Austin, prices are decreasing too, except those neighborhoods bathe in Apple effect.

Run the numbers.
Need 90% down in SJ to achieve cash flow neutral.
In Austin, despite the higher property tax rate, “high” insurance rate, property management and HOA, only need 30% down to be cashflow neutral. NW Austin and suburbs are appreciating at 5-7% p.a. despite Trump antics because tech and medical companies are expanding there. Recall @BAGB posted a graph that show Austin is the tortoise to SJ hare.

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I have shared my numbers in the past. You can be cash flow positive with reasonable down payments even today in the Bay Area if you buy multi-family

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