A lesson in economics

Boston Condos for Sale and Apartments for Rent

A lesson in economics

Boston condo buyers and sellers

You might not be a big fan of Pres. Trump, but I’d be suprised is you didn’t like his newest bill.

Let’s take a deep dive into why.

Everything went our way – except the higher mortgage rates.

The House of Representatives early this morning passed the One Big Beautiful Bill Act that delivers significant wins for the real estate sector, reinforcing tax provisions long championed by the National Association of REALTORS®.

NAR’s advocacy team successfully secured its top five tax priorities in the bill, including an enhanced small business tax deduction, a strengthened state and local tax deduction, and protections for the mortgage interest deduction. The bill also makes the current lower individual tax rates permanent and increases the child tax credit, moves that could help increase homeownership access for more American families.

In addition to NAR’s top tax priorities, the bill includes a broad range of other NAR-supported provisions—such as enhancements to the Low-Income Housing Tax Credit, estate tax certainty, renewed Opportunity Zone incentives, and the creation of tax-advantaged child investment accounts that can be used for qualified expenses of the beneficiary such as first-time home purchases—all of which strengthen housing affordability, investment, and generational wealth.
“We appreciate House leaders for taking this important step with a bill that supports hardworking families and strengthens the real estate economy. With lower tax rates, SALT relief, and new incentives for small businesses and community development, this proposal brings real benefits to everyday Americans,” says Shannon McGahn, NAR executive vice president and chief advocacy officer.
“While significant changes are possible as this bill moves to the Senate, NAR will stay closely engaged with lawmakers to ensure real estate remains a central focus,” McGahn says. “We are committed to advocating for provisions that expand opportunity, support homeownership, strengthen communities nationwide, and put the American Dream within reach for more families.”

In a recent national survey commissioned by NAR, Americans expressed strong support for retaining provisions in the 2017 Tax Cuts and Jobs Act critical to the real estate economy and homeownership. Fully 76% of voters are aware of efforts to extend the Tax Cuts and Jobs Act. Among those familiar with the law, support grows significantly when specific provisions are highlighted—86% back lower income tax rates for individuals and married couples, 83% support a new 20% deduction for independent contractors and small businesses earning under $400,000, and 80% favor tax incentives aimed at spurring investment in underserved communities.

The national survey of 1,000 registered voters was commissioned by NAR and conducted by Public Opinion Strategies and Hart Research April 3–6, 2025. It has a margin of error of 3.10%.

Below is a summary of the provisions included in the current bill:

Top Five NAR Tax Priorities

Qualified Business Income Deduction (Section 199A)

The bill permanently increases the QBI deduction from 20% to 23%. This deduction benefits more than 90% of NAR members, who are classified as independent contractors or small business owners. 83% of voters said they supported the 20% tax deduction for independent contractors and small businesses making less than $400,000 a year, according to NAR’s national poll.

State and Local Tax Deduction (SALT)

The SALT deduction cap is quadrupled from $10,000 to $40,000 for households earning under $500,000. However, the bill does not eliminate the marriage penalty. Thus, whether taxpayers are single filers or married couples filing a joint return, they can deduct a maximum of $40,000 in state and local taxes. The income cap and deduction both grow 1% every year over a 10-year window.

Individual Tax Rates

Current individual tax rates, lowered as part of the TCJA, are made permanent and indexed for inflation, aiding taxpayers and improving affordability for prospective homebuyers. 86% of voters support the lowered income tax rates for individuals and married couples, according to NAR’s national poll.

Mortgage Interest Deduction (MID)

The draft preserves and makes permanent the MID at its current level, maintaining a key tax benefit for homeowners and supporting housing market stability. There had been concern MID might be reduced or eliminated as a budget offset. There were 91% of the voters who support maintaining tax incentives such as the mortgage interest deduction for homeowners, according to the NAR poll.

Business SALT and 1031 Like-Kind Exchanges

The draft bill protects Section 1031 like-kind exchanges, which are often erroneously regarded as a tax loophole.

It also includes no changes for most businesses deducting state and local taxes (sometimes referred to as “Business SALT”). While the bill does provide limits in state-level business SALT workarounds for certain high-income professionals (e.g., law firms, hedge funds, consulting businesses, and other services), the provisions do not appear to impact real estate professionals.

Additional Positive Tax Provisions for Real Estate Economy

Low-Income Housing Tax Credit (LIHTC)

Key provisions from the LIHTC Improvement Act will be included to support affordable housing development.

Child Tax Credit Increased to $2,500 (2025–2028)

Temporarily raises the child tax credit through 2028 and then indexes it for inflation starting in 2029. The child tax credit supports families and could help with housing affordability.

Creation of Tax-Advantaged Child Investment Accounts

Can be used for qualified expenses of the beneficiary such as first-time home purchases.

Permanent Estate and Gift Tax Threshold Set at $15 Million (Inflation-Adjusted).

Prevents a significant drop in exemption levels and supports generational wealth transfer, aligning with NAR priorities.

No Top Tax-Rate Increase.

The proposed 39.6% top rate was removed from the bill.

Restoration of “Big 3” Business Tax Provisions

Full expensing of research and development (R&D)
Bonus depreciation
Fixes to interest expense deduction limits

Immediate Expensing for Certain Industrial Structures

Applies to structures used in manufacturing, refining, agriculture and related industries.

No Change to Carried Interest Treatment

Opportunity Zones

Renewed with revised incentives to encourage targeted investment, including in rural areas. 80% of voters expressed support for tax incentives for investors to encourage economic growth and development in underserved and poorer communities, according to NAR’s recent national poll.

Boston Seaport Condos for Sale

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A lesson in economics

Boston Seaport Condos for Sale

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So, let me see if I’ve got this right.

The US economy was seen as being in trouble. Investors were fleeing the stock market and turning to safer investments such as US Treasury notes & bonds.

Investors were worried because of the “credit crunch” that was gripping the markets, caused by the “subprime lending crisis” hitting the housing industry. This turn of events threatened the entire US economy, putting it at risk for a recession.

So, the Federal Reserve lowered the “fed funds” rate, which affects mostly short-term interest rates, hoping to loosen up the flow of credit on the open markets.

Which it did.

Money started flowing back out of Treasuries into the stock market. The DJIA has gone up 209 points since the Fed announced its decision on September 18 (in fact, the markets had been assuming a rate drop for several weeks, so much of the 900 point gain since August 31 could be attributed to the Fed move, in my opinion).

So, what happens when investor money goes into the stock market?

Well, in this case, bond market yields went down, while average interest rates went up (finance majors, help me out here with my analysis, I’m writing this very quickly).

(The reason why interest rates increased this time was that the Fed’s move made it cheaper to borrow, short-term, which means companies could take out more loans. Investors fear that because of the cheap cost of money, the economy will be in danger of overheating, causing the rate of inflation to rise and dropping the value of future dollars. Since bonds pay steady rates of income, and since these revenue streams would be worthless, in each upcoming year, because the values would decrease due to the effects of inflation, investors turn to the stock market, instead.)

Which means mortgage loan rates are now higher than they were, just two weeks ago.

Again, the cost of borrowing to purchase a home has gone up.

Thanks, Ben!

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