In Illinois the SALT provisions have changed home prices dramatically. It hits the $600 thousand to $5 million dollar homes the most. Over $5 million seems to be “I don’t care” money. Where people have so much that price is not important. And under $600 thousand does not seem to have a large affect on taxes. A home around a million dollars is a much harder sell than it was before. And $3 million dollar homes are just not selling here unless they are highly discounted.
But this is not just because of SALT. The annual property taxes are about 2% now on million dollar homes. So that alone is problematic. Then the SALT is just salt on the wound.
This and more has led to a top in real estate, in the hottest markets.
“The annual property taxes are about 2% now on million dollar homes.”
That is getting close to paying interest.
If the state increases the rate to 4% the value of the house will decline. If it decreases to $500,000 the state has reached the tax wall. Not sure what rate triggers the tax wall but I suspect Illinois is getting close.