Second Home Sales Rise Due to Tax Law Changes

North Carolina Real Estate Investment

If you are thinking about buying a second home you are part of a major transformation in the North Carolina real estate investment market. The annual number of people buying a second home in the US doubled between 2000 and 2004. Investments in North Carolina Real Estate are paying huge dividends for those who choose to purchase property in the mountains of North Carolina.

While demographics is part of the reason, thank the baby boomers, the other unexpected reason is the effect of tax law changes in the late 1990's.

When Congress amended the federal tax code in 1997 to permit up to $500,000 of gain (for married couples) on the sale of a primary home to be spared from taxation, homeowners did not have to buy expensive replacement homes anymore. With this couples can downsize into a less expensive primary residence and use the tax savings to buy a second home.

According to the NAR second home represented just 8.6 percent of all residential mortgages in the year 2000. By 2004 the percentage of second home mortgages had nearly doubled to 14.2 percent of all residential mortgages.

Who is selling and buying? Primarily baby boomers with above average incomes. The average household income for primary homebuyers in 2004 was $61,000, while the average income for second homebuyers was $102,000, nearly 70 percent higher. While investors helped drive this pattern in the past, due to poor returns in the stock market, demographics will be the driving force in the future. The NAR sees the boomers as the driving force for second home appreciation for the next 10 years.

Blowing Rock Investment Properties is privileged to offer signature services for investors and buyers seeking investment property and gracious living. We serve as buyer's agents for North Carolina luxury homes, horse farms, land, commercial real estate and 1031 exchange property. Our service area spans western North Carolina mountain real estate with a focus on real estate in Blowing Rock NC and the nearby towns of Boone, Banner Elk, Valle Crucis and West Jefferson. If you are looking for exceptional mountain property, please contact us.

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North Carolina Mountain Real Estate

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