Title: Luxury Outlook Report | People Power
Sotheby’s International Realty’s Mid-Year Luxury Outlook report is your insight into the global trends and events affecting the real estate market. If you’re interested in expert predictions about the future of the economy and industry, then read on for my breakdown of the report’s “People Power” section and recent news that could affect your real estate investment portfolio, including the Capital Gains Tax Proposal.
People Power
As the presidential election looms, you might find yourself wondering how election years affect the real estate market. Usually, it slows down. Many people tend to put their plans on hold and adopt a “wait-and-see” attitude before making a major purchase or sale, assuming that there might be a major shake up post-election. Christie-Anne Weiss, a Global Advisor with TRR Sotheby’s International Realty, states in the report, “Once the election is over and we know who the president is, business will resume as normal. It is buyer psychology; people do not make major investment decisions when there is imminent uncertainty.”
However, with the Fed’s recent announcement that they’re lowering rates by half a point and U.S. housing supply is at its highest level in four years, I don’t think we should expect the market to slow down too much. Many buyers and sellers who have been waiting patiently for a shift will want to strike while the iron is hot.
Capital Gains Tax
Another big-ticket item that might be top of mind for you, is the Capital Gains Tax plan that has been dominating much of our news feeds. Essentially, the plan proposed by Vice President Kamala Harris would tax Americans who earn $1 million or more 28% on long-term capital gains. This would be an eight percent jump from the current 20%, so if you’re in the bracket of Americans this would affect then it would be a sizable increase. Kent Smetters, an economics professor, weighed in for a recent CNBC article, stating, “There’s no question that there’s a lock-in effect associated with capital gains, and that will go up with a higher rate,” meaning that it could potentially lead to investors holding onto their assets.
There’s no way to predict with any certainty what will come to pass during and after the election, but it doesn’t mean that we can’t prepare for various outcomes right now.
Whether you are ready to take advantage of the lower interest rates and increased supply right now or you’d like to wait to tackle your goals until 2025, let’s discuss your real estate plans today. I’d be happy to review your real estate investment portfolio and discuss the best course of action in this evolving market.