Few home mortgages in Triad rise above proposed tax threshold of $500,000

News & Record (Greensboro, NC)

Nov. 13--GREENSBORO Pity Silicon Valley's working Joe, who must struggle to buy a home at the average price of $1.1 million.

Congress' proposal to reduce the cap on the mortgage-interest deduction from $1 million to $500,000 could put a cramp in the average Google executive's tax bill. Such are the hazards of living among America's industrial elite.

But around here, elite or not, you're not likely to be fretting much about losing any of your mortgage-interest tax deduction.

The median home price in Guilford County is $140,000, according to real estate website Zillow, and only 179 people out of 9,500 -- about 2 percent -- have borrowed more than $500,000 this year, according to the real-estate research firm Attom Data Solutions.

"It's going to affect a minority of people, all things considered," said Chris Young, certified mortgage planner with the Greensboro office of Benchmark Mortgage.

The deduction for home mortgage interest is believed widely to encourage home ownership and is considered by many to be an untouchable privilege in the American tax system. But the changes being proposed in Congress could affect people around the country in different ways.

Nationally 5.4 percent of this year's 6 million loans processed this year were of more than $500,000, Attom reports, almost twice the rate in Guilford County.

In Santa Clara, Calif., by contrast -- the heart of Silicon Valley and home of the San Francisco 49ers -- more than 11,000 families this year have borrowed more than $500,000 in an area where the median home price is $1.1 million. That's 28 percent of the market share that would be affected by the proposed change.

Young said many of the people in this market who can afford a house worth more than $500,000 don't even worry about a mortgage. They pay cash. That means Young isn't brokering many loans above $500,000.

"I think I'm doing three this month," he said.

Still, the proposal now making its way through Congress is a sore spot for wealthy homeowners. Bloomberg News calls the mortgage deduction a "sacred cow" in tax regulations.

The New York Times reports that the median national home price is $200,000, and fewer than 3 percent of homes cost more than $500,000.

But this sacred cow also could become a cash cow for legislators looking for ways to offset the corporate and individual tax cuts they're hoping to enact in this tax bill.

The Repubican-leaning American Action Forum reported earlier this year that the mortgage-interest deduction costs $70 billion a year in federal revenue, and other think tanks report that the richest Americans benefit the most from that deduction.

Any cut in the deduction would affect other cities in North Carolina more acutely.

In Mecklenburg County, for example, 6.6 percent of home buyers borrowed more than $500,000 to live in the booming real estate economy.

Yet in Wake County, where the job market is booming, only 3.2 percent of buyers have borrowed more than a half-million dollars this year.

In the Triad, investors and upper-end homebuyers are just not as concerned, Young said. He is a heavy investor in rental homes, and he said he rarely finances those acquisitions because he would prefer to own outright.

Generally, he said, most people aren't letting tax policy drive their home purchases.

"There's always going to be people that are not happy," Young said. But "financial decisions, from a housing perspective, are not being made over tax planning."

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