Howdy! Is it a good idea to purchase property in SF next year, especially with the impending tax reform? If so, which neighborhoods are the best to purchase in, especially if we’re looking for places from which it is easy to get to the South Bay? Our budget is $1.0M-$1.6M
The tax reform, if passed, will have an unclear effect. If passed, then people will only be able to deduct interest up to 500,000 vs 1M today. To put that in perspective, that means they lose out on 3.375% x 500,000 = about 16K of interest deductions. How much are those deductions worth? Well, in the 35% bracket that means roughly 6K, or about $500 a month. Net net, that means that houses requiring a $1M mortgage (so $1.2M or more) will now cost $500 more a month. This reduces demand. On the other hand, the tax reform also grandfathers existing mortgages - meaning people who already own a house can continue to deduct the full $1M. Which means that anyone with an existing house won't want to sell it. What's worse, today people have to own a house for 2 years before selling it to avoid capital gains. The tax reform changes this to 5 years. This significantly reduce the number of people willing to sell their home in a market where inventory is already at record lows. This reduces supply and increases prices. If I had to guess, I'd say the supply side effect will dominate. I'd consider buying a home in Sunset.
Make sense...
You know there is rent control in SF, don’t you? Why you want to pay 1m-1.6m for the same location while your neighbor is paying 2000-3000? The school lottery is another unfavorable factor for the price.
You can probably get a really sweet parking spot in SF for that budget!
What did you end up doing OP?
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Inner sunset 9/Irving area. Kirkham and Sunset blvd area is also really nice.
Agreed but not at that budget.