Hardware Retailing

DEC 2018

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

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Upcoming Events HARDWARE RETAILING | December 2018 58 Newsmakers Find more events online at TheRedT.com/calendar. To have your event added, contact Kate Klein at kklein@nrha.org. December 6 North American Retail Hardware Association (NRHA) State of Independents Conference Chicago January 10-12 House-Hasson Spring Market Nashville, Tennessee 11-13 United Hardware Buying Market Minneapolis February 7-9 HDW Inc. Spring Market New Orleans 8-10 Florida Hardware Spring Market Orlando, Florida 15-17 Monroe Hardware Spring Market Myrtle Beach, South Carolina 19-21 Kitchen & Bath Industry Show Las Vegas 19-21 NAHB International Builders' Show Las Vegas 21-23 Orgill Spring Dealer Market Orlando, Florida 22-24 True Value Spring Reunion Dallas Upcoming Events Federal Changes to Housing Affordability H omeownership benefits home improvement retailers for clear reasons, including the fact that homeowners maintain and upgrade their houses with products retailers sell. Buying, though, is more difficult than it used to be, due to high prices and a limited number of houses on the market for sale. A recently passed law could make affordability an even greater challenge. Paul Bishop, vice president of research for the National Association of Realtors, offers some insights on how federal legislation could impact the rate of homeownership and reduce the amount of money homeowners have to spend on remodels and maintenance. Housing affordability is a problem lingering from the economic downturn in 2007 because homebuilders have not caught up enough from the lack of home construction during the recession years, Bishop says. Issues such as mortgage rates and tax policy also impact affordability. Home mortgage rates are on the rise, reflecting Treasury rates set by the federal government, Bishop says. "The financial markets and global influences on the financial markets determine what the 10-year Treasury rate is, and that's closely linked to mortgage rates," he says. "The economy is growing at a pretty solid pace. Interest rates are probably going to be up for the foreseeable future, and all of that filters through to mortgage rates." Real estate accounts for just under 20 percent of gross domestic product, or approximately $1 out of every $5, in the U.S., Bishop says. Continued growth in the sector impacts the economy overall, which is on an upswing. Prospects of further economic expansion will push mortgage rates up even more, he says. The National Association of Realtors is monitoring the recently passed federal tax overhaul to see how it will impact the housing market. The law reduces the deductibility of mortgage interest from a mortgage size of no more than $1 million down to $750,000 and will affect the affordability of homes in high-cost housing markets, Bishop says. But tax changes that limit state and local income and property tax deductions will impact more people, he says. The deductions from federal income taxes are going to be limited to $10,000 per year. "Being able to deduct less from one's federal income tax means the cost of owning a home will increase," Bishop says. "That will particularly impact high-cost areas or those areas that tend to have higher property taxes and income taxes."

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