Inman News

Renewable energy and other tax benefits are a few of the items that you can take advantage of now.

BY KAYLA MATTHEWS

If you’re re not sure whether to buy a house now or wait until next year, here are four rather compelling reasons why 2019 may be a better time for a purchase than 2020.

1. Take advantage of year-end tax benefits

When you choose to buy this year instead of next, you’ll see the resulting tax perks sooner.

The benefits apply to your 2019 tax year filings. Interest paid on mortgages is typically tax-deductible, as are property taxes. However, there are limits as a result of the Tax Cut and Jobs Act, and you should be aware of those limits.

If you purchase a home this year and make energy-efficient upgrades, you can get tax breaks now that will be less next year.

More specifically, you can claim solar-based tax incentives after installing the respective equipment. The maximum reduction is 30 percent through the end of 2019, and then it falls by 4 percent in 2020.

You can also deduct some purchasing expenses from your 2019 taxes. Plus, you may qualify for the highest-percentage incentive if you decide to put solar energy equipment into the property.

2. Prices are very attractive in some markets (like Santa Fe)

Analysts also say some factors make the current housing market particularly favorable to people who are ready to buy.

Jonathan Miller is the president of an appraising company called Miller Samuel Inc. He says the market has excessive supply coupled with prices that started to decline in some markets a few years ago.

“What was different in 2018, and will be even more marked in 2019, is that there will also be product coming onto the market that was held back in 2016, when the market started to soften,” Miller said.

To put things in perspective, he anticipated that out of 8,000 new apartment units on the market at the end of 2019, only 2,000 would sell.

Looking at patterns in the marketplace doesn’t always tell the tale of what could happen next year. That means you should try to understand how several aspects make the market appealing now — you may as well seize those opportunities instead of hoping conditions hold for 2020.

3. Mortgage rates are declining

Mortgage rates are probably top-of-mind concerns for some of buyers. The rates a buyer receives depend on factors both within and outside of a buyer’s control.

For example, having a solid credit history, a high credit score and a steady job that generates enough income to ensure buyers can pay back their loans in full are all helpful. But, external factors such as inflation and the economy, also impact mortgage rates.

According to data published in early September 2019 by Bankrate, fixed and adjustable-rate mortgage rates are falling. This means the rate a buyer pays to cover the mortgage on every $100,000 borrowed is less than in the recent past. That prospect could make buyers realize they should make a move now rather than waiting to see what happens with mortgage rates in 2020.

4. 2020 could bring even more uncertainty to the economy

Half of the real estate economists and experts surveyed by Zillow in late July believed that a recession will occur in 2020, according to the company’s second quarter Zillow Home Price Expectations Survey.

Recessions tend to cause people to change their spending habits and prepare for the worst. That may mean would-be homebuyers decide to delay purchases once a recession hits, especially if they hadn’t saved up the entire amounts needed yet. (In contrast, if a buyers have put money aside for years and are eager to buy, they may have a better chance of success during a recession.)

That’s because the down payment is often a substantial obstacle for buyers, and some may view it as an out-of-reach obstacle during a recession. And, if unemployment rates are up and people worry about losing their jobs, they could understandably decide that purchasing property isn’t a risk they want to take.

Additionally, 2020 is a presidential election year.

“Elections generally slow down the housing market because people are feeling unsure about what’s next,” Selma Hepp, Compass’ chief economist and vice president of business intelligence told Mansion Global last year.

When people feel a restoration of political stability, the effects “bring confidence to the buyer and seller communities.”