What does yesterday’s blue wave mean for home sales?
The agenda will be focused on "affordable."
Near the top of the list will be passing the More Homes on the Market Act, a piece of legislation that was submitted in January, 2025 and has yet gone to a vote. NAR has made raising the capital gains exclusion on home sales a major priority.
What’s the realistic path for that in the lame duck or the next Congress?
From Shannon McGahn, NAR’s executive vice president and chief advocacy officer: "Thanks to NAR’s extensive lobbying, the More Homes on the Market Act has strong bipartisan momentum, with one-third of the House and one-quarter of the Senate signed on as cosponsors.
More than 13 million homeowners could exceed the current capital gains exclusion if they sold today, creating a significant barrier to bringing more homes onto the market. The legislation would double the exclusion to $500,000 for individuals and $1 million for married couples and index it to inflation.
There are still potential avenues to advance this legislation or other reforms during the lame-duck session, whether through a broader legislative package, a tax vehicle, executive action or other bipartisan negotiations.
We’re continuing to work with our champions in both chambers and the administration to identify every opportunity to get common-sense reforms across the finish line.
And if it doesn’t happen this year, we’ll carry that bipartisan momentum into the next Congress."
Boy, that sounds like it’s going to happen – and she said that before yesterday!
They called it the More Homes on the Market Act, and that’s probably what they are going to get – but is that what they want? If there is a flood of new listings without increased demand, aren’t home prices going to go down? That isn’t great for re-elections!
Forget the politicians – how should potential home sellers play it?
There are reasons it might not pass:
The Joint Committee on Taxation and independent analyses estimate the revenue loss to the federal government to be roughly $46.4 billion over a 10-year budget window.
Concerns that it might make homes too affordable (A big price drop).
Trump could veto.
But let’s imagine that the new Congress wants to make a big splash early, and this Act gets passed in January – or sooner.
Most potential home sellers won’t believe it until they see it.
They will check with their tax accountant, think more about where they are moving (and maybe make a couple more trips there), start sprucing up the house, and put off going through their stuff to the very end.
The soonest most people will get their home on the market is March/April. Oh, but isn’t that when all of the unsold 2026 listings will be hitting the open market too? YES!
Easy solution!
Get ready now, and sell in January/February, right after the Act gets passed!
Many sellers could decide to wait it out, but wait for what? Wait until pricing settles down? It will settle down all right.
Think of the majority of homes going on the market. Almost all of them will be older and under-improved – just the product type that is taking a beating on price now because buyers can afford to be picky and they want turnkey.
Those sellers can afford to sell for less and still make out financially due to the new tax laws! The buyers will want to share in the sellers’ good fortune by paying less.
It will be an open invitation for buyers to lowball the long-time owners.
Won’t any perceived boost from the doubling of the tax exemption be mostly if not entirely erased by lower sales prices? Yes, and though both sellers and buyers will feel like they won, they will leave lower comps behind.
Don’t panic. But if you’re going to panic, panic first!
