Should we cut the capital gains tax on home sales?

HousingWire

On today’s episode, Lead Analyst Logan Mohtashami talks about the pros and cons of cutting the capital gains tax on home sales. He also discusses other economic proposals ahead of the midterms and how they could affect housing.   Related to this episode:   HousingWire Mortgage Rates  https://www.housingwire.com/mortgage-rates/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  HousingWire Mortgage Banking Summit – October 1  https://events.housingwire.com/mortgage-banking-summit-2026?utm_source=housingwire&utm_medium=website&utm_campaign=hwd_podcast_0728  More info about HousingWire  https://lnk.bio/housingwire   Want more from Sarah? Don’t forget to subscribe!  https://www.housingwire.com/subscribe/   The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:10hello everyone of course we are missing someone right now sarah wheeler has technical issues

00:18and begrudgingly trust me it was very hard for her to say uh can you do the podcast yourself so

00:26logan moshami lead analyst for housing wire today and i am going to talk about a few subjects

00:32uh without sarah here but of course uh our last podcast and last article we wrote we talked about

00:38how to kind of track foreclosure data properly out there and also i hope the uh article itself

00:45uh showcased a kind of a tracking model and for all of you that are subscribers to housing wire

00:52intelligence i think you all can do this for your own areas too again my stuff is always to talk

00:57about the national data but i'm here to try to help everyone out on your local data but today's

01:02subject is actually going to be something that's national in in nature because we are getting

01:08closer to the midterms and things have turned out a lot different uh this year in 2026 of course when

01:15we went into this year a lot of people were thinking two to three rate cuts number ai was going

01:21to take

01:21all the jobs and private credit was bad and and the 10-year yield got below four percent rates were

01:27at six percent but of course you know inflation picked up then the conflict picked up but as we

01:33get closer and closer to the uh midterms you're probably going to hear more and more ideas come out

01:39the one that i want to discuss today is the capital gains exemption right you know people talking about

01:45well nobody should pay any capital gains on on housing or maybe the baby boomers uh should have

01:52go from five hundred thousand to one million there's different forms of this uh capital gains uh exemption

01:58so i'm going to give kind of a pro and con take on this obviously the the pro take would

02:05be well

02:06these baby boomers are sitting on a lot of equity and they don't want to sell because they don't want

02:11to play capital gains i'm always somewhat suspect of that um just in general like the median sales

02:19price of homes there's like four hundred thirty thousand somewhere around there and to go from

02:23five hundred to one million you know you're still going to have to pay somewhat capital gains for some

02:29of these people that are sitting on two or three billion dollars some people are sitting on five

02:33million dollar homes uh um but the baby boomers have simply not only not downsized uh um they have

02:43some of them have even shown the propensity to buy kind of uh the same type of house or or

02:48even bigger

02:48and let's talk about let's go all the way back to like the 1920s to the 1970s homes were smaller

02:54right we've always had small homes being built it's really from 1975 that we started building bigger and

03:01bigger homes uh with family sizes getting smaller so capital gains for the baby boomers in essence

03:08if you have a million dollars i'm going to give you like for example my parents my parents own their

03:14house free and clear is 1.7 million they have about seven they paid 700 000 for it uh if

03:22they clear that

03:23extra 1 million from the purchase price you know that's more money in their pockets i don't know if they

03:30would actually sell their house and buy something smaller uh but for the baby boomers that's money

03:37so i i look at this as kind of like injecting cash into you know baby boomers who tend to

03:44vote as well

03:45um on the economic side of it uh that's the positive thing that people say that this will uh if

03:53you even

03:53shorten the duration say this is only going to be here for two years it will get more sellers to

03:57come

03:58into the market and those sellers will be buyers and the transaction models will go but the baby boomers

04:03to me keep more money so now this goes into the con side uh of this why i am very

04:11hesitant on this is

04:12that the baby boomers are massive this isn't like a wall street thing and when they have more money

04:19in their pockets to buy a house their competition is could be another baby boomer could be a gen xer

04:27could be an elder millennial uh early millennial or a gen z person so it gives a higher uh population

04:36or

04:36order uh uh group a lot more money to buy another house versus another group who doesn't have that

04:44uh a capacity to uh so when we criticize wall street right we always said wall street has all

04:52the money they shouldn't be buying homes we're in a sense not talking about the inflationary

04:57pressure of something like this uh because we can't really think too far ahead we just think oh my god

05:03nobody pays capital gains that's great you know and they're talking about indexing capital gains for

05:09stocks and inflation and all that stuff so when we think about that going out in the future all i'm

05:14want to propose here is imagine if my parents sold their house and they didn't have to pay

05:22any kind of capital gains they're going to keep that full 1.7 million and if they wanted to buy

05:29another

05:29house boy there's nothing really kind of holding them back um but that's a that's an extreme case what if

05:36somebody literally just had 750 000 dollars and now they're they get to keep that clear and they go

05:43and they compete with another family a younger family who has to get a mortgage and that person

05:50goes hey 750 000 i'm going to give it to the baby boomer this is my concern on something like

05:57that that

05:58nobody talks about uh because it is true when that baby boomer sells that house most of the times

06:05they'll go buy another one and the transaction models will pick up but nobody wants to think

06:10about this as now this group has a lot more cash to compete and we always saw what happened during

06:17covid people in california going to boise people in california go to texas they're going to tennessee

06:23whatever they have so much money that you know they can buy whatever they want and it's disproportionately

06:29unfair to the local population who you know a lot of them have to get mortgages well imagine

06:34having a cohort as big as the baby boomers have a lot more money i mean they've done pretty well

06:42for

06:42themselves so on this topic i understand people nobody wants to pay taxes trust me i totally get that

06:50um but i think on this one we might have to somewhat think about you know what's the implication of

06:56that

06:56seller being a buyer this is not like nobody's talking about well all these baby boomers are

07:00going to sell and then they're all going to rent the rest of their lives no this is a transaction

07:05these sellers get to keep more money they'll have more money to buy another home but we never talk

07:10about the competition for that and just because they're so massive i think that's something to think

07:15about going out in the future on this and midterms are coming up and of course as midterms coming up

07:22is

07:22that going to be something where the white house really starts to find a way to wrap this up um

07:29you know with energy prices coming down and mortgage rates coming down i want to go back to my original

07:36premise uh when president trump won the election sarah wheeler myself did a did a podcast and i talked

07:43about what's the game plan here and i call it the trinity effect and i i bring this up because

07:48of what

07:49uh a vice president uh uh jd vance said today i said to me i said the president wants three

07:56things

07:56he wants a lower dollar he wants lower mortgage rates he wants uh uh lower energy prices okay so

08:03why does he want lower energy prices everyone here everyone has to go pay for gasoline when energy

08:09prices are down people feel better okay as an economy we can handle higher gas prices you know we've

08:15shown that over the last uh 16 years but that is something that voters get to see mortgage rates

08:21what if you get lower mortgage rates what happens right lower mortgage rates people buy homes when

08:26people buy homes what do i always talk about people buy homes they have sex they have kids

08:30you know you you get to move on with your life that is something that voters like to uh uh

08:37vote on so

08:38having lower energy and mortgage prices affects the voting pool that uh the white house wants

08:45the lower dollar thing i think confused a lot of people because people why would you want a lower

08:49dollar we always talk about king dollar well jd vance came out uh in a video saying i i don't

08:55want

08:55king dollar anymore king dollar is bad for america right because you know uh uh we get to borrow and

09:01limited amounts of money he has a really weird take on on it but i always thought president trump

09:07wanted a lower dollar because lower dollar corporate earnings actually do get better and they can sell

09:12stuff right uh when the dollar gets too strong uh um uh you know what we we can buy more

09:19stuff

09:20technically from other countries and that's really on a manufacturing side it's not the best thing

09:25right if you want to be exporting stuff to other people a weaker dollar is beneficial so

09:32president trump to a degree got his lower dollar at one point uh he got his lower energy prices i

09:38think

09:38he made a deal with the saudis to get more oil out there but you know there it is and

09:42then you got

09:43mortgage rates down to six percent and imagine if the entire year was six percent the whole year more

09:49sales energy prices low the conflict changed a lot of things um so going out for the rest of the

09:57year

09:57you know let's take a look to see if if there is an actual authentic end to this uh and

10:05ships are

10:06flowing and uh uh the 10-year yield starts to come a little bit lower because of mortgage spreads you

10:11don't need to have too much help from the 10-year yield like you've done before uh and spreads get

10:17just a little bit better you can get down to six and six and a half and six and a

10:21quarter and that's

10:22that's workable what we've always said in the podcast that once the federal reserve became very hawkish

10:28we raised the base up on all rates and that six and a half to 6.75 should be kind

10:33of where we

10:34should range it we've gotten a little bit above 6.75 when the conflict gets a little bit more

10:39hectic but we still haven't breached over seven percent so uh let's keep our eye on these kind of

10:45this theme of you know midterm politics coming up and i'm sure we're going to get more things about

10:51you know capital gains but just keep an open uh like an open mind on the fact that this is

10:57maybe

10:57not be a hundred percent positive thing browsing i get it baby boomers are doing great they'll get more

11:02money you know but also let's always think about the secondary impact of something like that this

11:08massive generation which has a massive generation wealth we'll just have more wealth and if they

11:13wanted them to go buy other homes the competition usually is you know a younger family a gen xer you

11:21know it's not this 100 well these baby boomers have these mcmansions and the young people want to

11:26come in so uh just keep an open eye on that and we'll always hear uh keep an eye on

11:32what the 10-year

11:33yield and mortgage spreads and the conflicts do because that's the big variable and it should get

11:38a little bit better closer to midterms or if the iranians really want to inflict as much political

11:43pain on trump and jd vance you know keep this going on and on and just to let everyone remind

11:49themselves but what we have seen still and you know by the time this podcast comes out the tracker will

11:55be

11:55housing is just kind of holding up and you know we we look at the data we still haven't had

12:01a very

12:02very big negative curve with rates getting up here but rates aren't that much different than where they

12:06were last year so hug a mortgage spread uh we'll we'll keep that in in mind in the future but

12:12just

12:12keep an eye on midterm politics politics is the word itself right politics many blood-sucking parasites

12:19and we'll just be open to the idea that the capital gains might not be the super best idea

12:26in the world especially if you're a young home buyer and all of a sudden this baby boomer comes

12:30in with a lot more money but also let's keep an eye on the conflict you know if things start

12:35to get

12:35better and things start to move maybe the 10-year yield does go a little bit lower and spreads get

12:39better and maybe we can get a little bit better a positive demand curve toward the end of the year

12:44and for sarah wheeler who's watching this see i totally behaved myself out there even with a

12:49political discussion and uh we'll have a very interesting week to go over thank you

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