From The Real Deal:
While homeowners in high-tax states like New York and New Jersey may be packing their bags to move to Florida and Texas, real estate professionals in California say they are not seeing an exodus spurred by changes to the federal tax code.
But the new rules could have a “chilling effect” on asking prices for homes in the state, and lead many residents to decide to rent instead of own their homes, one private wealth manager said.
For the moment, agents and real estate executives interviewed by The Real Deal say they aren’t seeing a substantial number of buyers making plans to sell their million-dollar homes and leave the state.
California’s tight housing market has fueled soaring prices in both Northern and Southern California.
“All high-end sales are up,” said Nick Segal, president for Southern California of Pacific Union International. “Our biggest problem in that market is inventory. If sellers aren’t willing to put their houses on the market then I guess they’re not looking to leave.”
The new federal tax changes bring added pain to California residents already frustrated by the state’s high cost of living and some of the highest state income taxes in the country. Those state taxes have caused many residents, especially ones on the lower-end of the earnings spectrum, to migrate in recent years to Nevada, Texas, Florida, and other states with lower taxes.
In January, home prices in Southern California posted the largest year-over-year rise in 44 months. The median price rose to $507,000, reflecting an 11.4 percent hike since the year prior.
“Sure, we have seen a lot of people over the years move from here to Las Vegas, from here to Arizona, from here to Texas, Utah and Wyoming,” said Beth Styne, chief operating officer at Coldwell Banker in Los Angeles. “That is about state taxes. But our state taxes have been exorbitant for a long time.”