Will the New Tax Plan Impact the L.A. Housing Market in 2018?

California homeowners are seeing a substantial impact from the new tax plan. The state is home to the five most impacted metros in the US, including Los Angeles, according to an analysis from The Apartment List. Los Angeles homeowners will lose $3,300 in housing-related tax deductions this year. It is the third most impacted market in the state and the county, on a list that includes San Jose, San Francisco, Oxnard and San Diego.

“We estimate that the median homeowners in the L.A. metro will lose $4,000 in housing-related tax benefits in the first year of the new tax code,” Chris Salviati, a housing economist at the Apartment List, tells GlobeSt.com. “This is a bit less than the losses for the median homeowners in the San Jose and San Francisco metros, who will lose $5,400 and $4,500, respectively, but still greater than the losses for homeowners in many other parts of the state. The differences across metros within California is driven by differences in home values.”

California is hit so substantially by the tax code because it has a combination of high home prices and high state taxes. “The value of housing-related tax benefits is tied directly to home values, as well as local property tax rates,” explains Salviati. “Since California has a combination of high property values and high local tax rates, many of the state’s homeowners are hit particularly hard by the changes to homeowner benefits under the new tax code.”