President Donald Trump’s tax reform plan revealed at the end of April will not severely disrupt the health of the housing market, according to a new research report from Trulia.

But this doesn’t mean that the changes don’t come with consequences, as the report pinpointed which group is mostly likely to feel the greatest impact.

“While the proposal does not do away with the mortgage-interest tax deduction, it doubles the standard deduction and eliminates the ability of filers to deduct state and local taxes, including property taxes,” said Trulia's Chief Economist Ralph McLaughlin. “While raising the standard deduction will undoubtedly put more dollars into the pockets of homeowners, it’s less clear how these changes affect the financial advantages of buying a home.”

McLaughlin noted that he investigated the matter with the help of Prashant Gopal and Joe Light at Bloomberg.  

So who would most likely be impacted by the change? Middle income American households making between $68,540 and $129,422 who are looking to purchase a home between $358,000 and $676,000 and who take out a mortgage between $322,200 and $608,400.

Portland has the largest share of for-sale home listings that would potentially be affected, while Honolulu has the largest share of households. The full methodology for these numbers can be found here.

Even though these cohorts will be impacted, Trulia noted that it still, overall, doesn’t think the housing market will be worse off under the proposed tax reform for three reasons.

1. The standard deduction

The loss of the MITD would be made up for by the much larger increase in the standard deduction, leading to more money in a household’s pocket at the end of the year. Though, as we’ve shown, the tax benefits of homeownership will erode for some, it might help increase the ability of renters to save up for the all elusive down payment.

2. Other deductions

Mortgage interest and property taxes are not the only deduction that itemizers take, and other deductions, such as medical expenses and charitable contributions, may push household itemizations to be greater than proposed standard deduction. In this case, buying a home might help households write off more than the standard deduction, and thus the financial incentives wouldn’t erode much.

3. Not final

These proposed tax reforms are just that: proposed. These reforms must make it through Congress, so none of these changes are guaranteed.

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