I have watched people say, for the past several years, that the trend is for smaller, more functional homes. I believe this is true; I just don't believe this is true in every market. With the infamous 'Fiscal Cliff,' talks on-going, there is a possibility that this trend will take hold whether it is by preference or not.
Frankly, much of my work with buyers has to do with folks who are 'moving up.' That can be defined in a number of ways. Sometimes 'moving up,' means getting more space to accommodate a growing household. It can sometimes mean purchasing a new home to show the world (or themselves) that they have 'made it.' And often, it means buying a more expensive home so that they can take a larger tax deduction and improve their personal financial situation.
I am not commenting here on the politics of this tax deduction. I long ago decided that there is nothing to be gained by creating an on-line political discussion.
What I will comment on, however, is my belief that if this tax deduction goes away, much of my business--and all the peripheral businesses that benefit from my work--will, too. I realize that sounds melodramatic, but I don't think that it is.
I work in one of the wealthiest counties in the country. Many of my clients are entrepreneurs or executives. Their net worth is tied to their after-tax income. Tax deductions matter to them.
I realize that we as a country have bigger problems than whether one of my clients moves up to a bigger house because they need a tax deduction. In fact, my personal beliefs about how to handle this fiscal cliff require that I struggle with this issue. But in terms of sheer numbers of clients and the value of property that I sell, I am very, very confident that eliminating this deduction will result in a significant negative change in my business. It will also create a surplus of large, high priced homes that will be very difficult to sell.
Modifying the deduction is a different scenario. Changing the amount of the deduction would have an impact, but as long as it remains in place, I believe that my business will still be viable. Some deduction is better than no deduction.
This 'fiscal cliff,' is a huge turning point for our country. I would be remiss, if I did not point out that 'going off' the cliff, would also have a huge impact on my business. Fairfax and Loudoun Counties are home to many, many people who work in the defense business and for the Federal Government. In fact, almost everyone's livelyhood is tied, directly or indirectly, to the government (so please, Congress and Mr. President, negotiate in good faith and keep this from happening).
It has been argued that this deduction is an entitlement for the rich. I understand the argument. I also know that my business will suffer greatly, and in fact the local housing industry in general, if this deduction goes away.
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