Something fresh, new, and different occurs, and in an old-time newsroom meeting, an editor would call it an oddity. Hardly worth a note.
Something like the first instance happens again in a short space of time, and it's likely to be dismissed as an accident, a coincidence, a curiosity at best.
Three times, though, and the matter transubstantiates. It's fresh; it's new; it's different; and now there are three examples of it. And in the mind of a journalist, especially one trained never to let facts get in the way of a good story, three cases of anything make a trend. And a trend, especially at its leading, bleeding edge, is the Next Big Thing. Everybody's going to be doing it.
Now, this:
- A professional friend from New Jersey just completed work on her 2018 taxes, and got a shock.
- A multifamily developer we spoke to in the past week or so mentioned that people--aka renters--he knew that have begun to take stock of their new individual or married couple deduction are wondering "why would we ever want to own? What's in it for us?"
- And, for No. 3, we'll shoot a little higher, beyond personal anecdote. A certain governor of a very important Middle Atlantic state, who's not known to pull punches or mince words, just took a look at the state's income tax coffers and blew a gasket, blaming a $2.3 billion revenue shortfall on a "diabolical" tax reform that's causing people to flee New York for homes in Miami.
Now, whether Gov. Andrew Cuomo actually went to Miami to confirm that refugees from New York had just bought or rented homes there, or whether Gov. Cuomo would feel less than welcome in a place full of people who had run from New York's punishing tax burdens, it's not clear.
What's clear is that we've got three related examples of something, and since that something could mean a lot to residential developers and builders in various parts of the country, it's time to look at it as a trend.
Perhaps, the next big thing.
Wall Street Journal staffers Laura Kusisto, Arian Campo-Flores and Jimmy Vielkind, teamed up this past week to write:
A growing list of public officials in high-tax states are expressing alarm that big earners are bolting to low-tax states as new data suggests some home buyers are moving in response to the year-old change in the federal tax law.
New York Gov. Andrew Cuomo became the latest on Monday when he blamed a $2.3 billion state shortfall on the new federal tax law that he said is driving people to leave the state. During a news conference in Albany, Mr. Cuomo said the 2017 law capping a deduction for state and local taxes at $10,000 is the reason for the deficiency. He specifically mentioned Florida as an attractive option for New Yorkers who are unhappy with the change in the tax law
Preliminary data show a jump in Florida home purchases by buyers from high-tax states. Home values in lower-tax areas have been rising faster than those in places where limiting the ability to deduct high state and local taxes eroded some of the savings from the federal tax reduction, according to an analysis by real estate and data firm Zillow.
Now, honestly, I like a trend as much as the next journalist, and get an absolute rush when I'm out in front of a trend that's going to become the next big thing. Especially when reporting on it might help the residential construction and development business community act smarter with investments in geographical markets that may get a lift or take a hit from this trend.
Still, despite Gov. Cuomo's certainty that it's Uncle Sam's fault--not Mother Nature nor Father Time, at work--that New Yorkers have begun abandoning the state for Florida, we need to look at migration patterns with other factors in mind as well.
On the one hand, the WSJ piece quotes Zillow analysis of its knowledge base as evidence supporting the impact of tax reform fallout on the exodus from high-tax states like New York, New Jersey, California, and Connecticut.
As the housing market slowed in the latter half of last year, higher-cost markets that were most affected by the tax bill slowed more sharply, Zillow data shows.
In ZIP Codes where a larger share of residents take state and local tax deductions, home values grew nearly a percentage point slower in December than in ZIP Codes that rely the least on deductions, according to data from Zillow provided to The Wall Street Journal. That is a shift from November 2017, before the bill passed.
On the other hand, come on!
What about the fact that New Yorkers have been migrating to Miami forever, and that wintertime is when this typically happens?
What about the fact that these "high-tax" states are also expensive states in every other way as well, with few attainably-priced housing options?
What about the fact that in lower-cost markets, job opportunities have been growing, luring young adults to places where they can both make a good living and live affordably in their home?
What about age-demographics, and the fact that there's this little phenomenon called the Baby Boom now aging into retirement, which by itself might be looked at as potentially playing havoc with all kinds of out-migration patterns, from cold to warm, from expensive to less so, from places where it's less likely to find second or third late career options to where it would be more likely such post-career jobs might be.
Yes, sticker shock as people sit down and prepare their 2018 taxes, may be an influence for some, along with all of these other factors. What's more--the power of the new individual and married couple deduction may indeed work as a disincentive for some to buy, especially as multifamily and single-family rental communities offer more and more of the same living experience young adults might want from ownership.
Still, despite the competitive instinct to want to be ahead-of-the-curve in spotting the trend of huge impact and enormous implications of the after-effects of tax reform, I and my journalist colleagues may have to remain patient.
