how does the new tax plan affect the stock and housing market

THE THRIFT SAVINGS PLAN ALLOCATION GUIDE Forums Message Board how does the new tax plan affect the stock and housing market

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    Just curious to get people’s opinions. I live in the VA area, and I’m thinking of buying a house, but not sure how this tax bill impacts housing.

    Ditto on the stock market–do people see this bill helping in the short term, but leading to a bubble in the medium term?

    TS Paul

    I’m going to talk more about both of those subjects in the upcoming update, but some quick thoughts here…

    It will be interesting to see what exactly winds up in the final tax bill. I think that to large extent the short term benefits are priced into the market – we may see a small bump when it gets to final passage, but nothing extraordinary. Longer term, some individual stocks should see a serious bump (particularly companies with large overseas cash piles), and the market should generally benefit as the cuts start showing up in quarterly earnings reports.

    With respect to the housing market, if the proposed $10,000 property tax deduction cap stays in place that will definitely hurt the values of expensive properties in states with high property taxes. In Virginia, that should only be properties costing over a million dollar. In a place like Los Angeles or San Francisco, even buyers of “entry-level” homes will have thousands of dollars of non-deductible tax payments, so that will certainly constrain the ability of some people to buy and cause prices to flatten to some degree.

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    Many thanks for your thoughts! And looking forward to the next update!

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