Popular real estate website Zillow estimates almost $40 billion could be injected into the American housing market as a result of tax cuts to Americans in 2018.
A report issued Thursday by Zillow suggests that the average taxpayer will receive an average tax cut in the amount of $1,600 and could use that money to improve their living situation.
“Despite new limits to two longstanding tax benefits for homeowners, the typical American taxpayer saw their tax burden fall in 2018 as a result of tax reform,” said Zillow senior economist Aaron Terrazas. “Some of these tax savings will still find their way into the American housing market, even though they were not explicitly targeted there."
Zillow surveyed homeowners and renters across 20 metropolitan areas. It was discovered that people who rent are more likely to improve their living situation by spending about 11 cents for every dollar of these tax cuts on buying or renting a larger home.
Zillow also surveyed homeowners who found are more likely to spend 15 cents on the dollar on home improvements or renovations.
Zillow anticipates the trend for both homeowners and renters will be people renovating or remodeling their current home and then staying in it — rather than improving and selling.
Renters that Zillow spoke to in Phoenix said they would spend the smallest portion on upgrading their housing.