Mitt Romney caused quite a stir earlier this week when reporters overheard the presumptive GOP presidential nominee tell donors, “I’m going to probably eliminate for high income people the second home mortgage deduction.”
While Romney could probably personally stand to lose a break on his second home (not to mention third, fourth, etc…), the idea is not one that should be casually tossed about.
In fairness to Governor Romney, he’s not alone in thinking that eliminating the mortgage interest deduction for second homes is a budgetary and political win-win. But consider the following data:
Second Home Statistics
- Using 2009 American Community Survey data, the National Association of Homebuilders estimates that there are 6.9 million homes that qualify as non-rental second homes (more than 5% of all housing units in the U.S.).
- 907 counties (28% of 3,221) in the U.S. had at least 10% of the housing stock (all units, owned and rental) consisting of second homes. There is at least one such county in 49 states.
- 339 counties (10.5%) had at least 20% of the housing stock consisting of second homes.
- Of the 26 counties where 50% or more the local housing stock were second homes, six were in Michigan, five in Colorado, two each in Pennsylvania, Utah, Massachusetts, and California and one each were in New York, Alaska, Idaho, Missouri, Wisconsin, Texas and New Jersey.
- The states of Florida, California, New Jersey, New York, Texas, Delaware, Michigan, South Carolina, Nevada, Massachusetts, Illinois, and Arizona contain at least one county with at least 25,000 second homes.
So before politicians and pundits continue to pound on the MID for second homes, it would be wise to consider two thoughts on the subject.
- Geography. Taking a look at the maps below, some areas where there are a lot of second homes are the expected places (South Florida, North Carolina, Hawaii, Southern California, Colorado, Arizona) and some are a little more surprising (Texas, Michigan, Wisconsin, Minnesota, Pennsylvania). What stands out is how widespread second homeowners are. While this in itself is revealing, it’s also compelling because many of these states- Michigan, Minnesota, Arizona, Colorado, Florida, North Carolina and Pennsylvania–are also all presidential battleground states. President Obama certainly has realized this with his renewed focus on the housing market and beleaguered homeowners the last six months.
- Density. The MID on second homes presents a dilemma for policymakers intent on reducing or eliminating it. The first map below shows how widespread second homes are, but the second map speaks to how compact certain communities are. Logically, the resort areas where you would find second homes, such as lakes, beaches, ski areas, etc., have extremely high concentrations of second home owners. Herein lays the rub: how do you eliminate a tax structure for real estate that would most certainly affect property values of entire communities all at once?
Photo Credit: Miamism