Let's talk about the housing market, why California mansions could see a drop in prices, and a new tax plan that could have an effect on everyone. Americans are leaving California and New York in droves, people getting fed up and moving to Arizona, Nevada, Texas, or Florida, and the main reason why is money. For the first time ever, the housing market is being cut in half. National housing prices are both crashing and surging at the exact same time depending on where you live, and remarkably something like this has never happened before in history.
On a broad scale, it is true that prices are coming down. The Case-Shiller index shows prices are already five percent lower than they were back in June 2022. This marks a rare occurrence where prices are officially lower year over year, the last time this happened was in 2012. The main culprit leading to these lower prices isn't higher interest rates but instead more inventory. Despite fewer sellers listing their properties, the ones that do are facing sixty percent more competition than they had a year ago. The increase in inventory prompts some sellers to begin reducing prices.
The entire housing market has been cut in half, with the West Coast experiencing a 10% drop while the East Coast sees a 10% gain. Home prices fell in Seattle and San Francisco but surged in Miami and Orlando. The areas experiencing declines align with higher-priced houses, suggesting a net migration to locations with more affordable housing.
California has passed a new housing tax effective from April 1st, imposing an additional four to five and a half percent tax on all properties sold over $5 million. This is expected to significantly impact the high-end property market throughout the entire state, potentially leading to more people leaving.
The new tax, known as Measure LA, aims to fund affordable housing and resources for the homeless. However, concerns arise regarding its potential impact on housing supply and business expansion. Critics argue that it may discourage investors from adding more housing supply to the market.
In addition to the housing market, there is a new tax proposal at the national level to address the growing national debt, approaching 32 trillion dollars. The proposal includes increasing the corporate tax rate from 21 to 28 percent, a minimum income tax on the .01 percent, increasing the Affordable Care Act tax, and raising the top tax bracket from 37 to 39.6 percent.
The author also mentions a proposal called the Fair Tax Act, suggesting a flat tax on consumption as an alternative to income taxes. However, the feasibility and potential impact of this proposal are questioned, and the author expresses skepticism about its viability.
As the nation grapples with these tax proposals and the housing market undergoes significant shifts, the author encourages readers to share their opinions on these matters.
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