Following the cryptocurrency crash in early 2018, the stock market has followed suit. A substantial dive in investment values and income for Long Islanders is only compounding the pain of high local property taxes, and the impact of the new Tax Cuts and Jobs Act.
Down Goes the Dow
The Dow Jones began diving from its recent record high at the end of January. By February 2018 the Dow had fallen over 10%, by over 2,000 points, into what the Wall Street Journal describes as correction territory. For years analysts have been predicting that the bull run that started in 2009 is going to burst. Many have described it as being 60% or more overvalued. That means the recent dip is only likely to be the beginning of what’s to come. When stocks go down it can hurt jobs, personal incomes, and definitely rocks the financial security and confidence of individuals and families.
The Double Whammy
What’s worse about this trend is that it comes right as Long Islanders are trying to grapple with the impact of the new Tax Cuts and Jobs Act. Many fear they are going to be paying a lot more in taxes. Additional income taxes, and higher annual property taxes, combined with fewer and limited tax breaks, could take more of a bite out of incomes from this year forward.
Home equity is up to new record highs, and lines of credit may provide some temporary relief and financial wiggle room for some Long Island homeowners. However, it is more borrowing, which may no longer be tax deductible. Real estate can still be a good investment, but there is a big need to secure and balance overall finances today. That means working to lower expenses, and increase income. Shifting stock market investments to income producing real estate may provide more security. At least if you can negotiate those property taxes down, and create a solid cash flow cushion. It is also more vital than ever to appeal and get the property taxes on your primary residence and second home reduced.