Area homebuilders received welcome news Wednesday that the federal first-time homebuyer tax credit is being not only extended but expanded to include buyers who already own homes.
President Barack Obama is expected to sign into law a bill that extends the $8,000, first-time homebuyer tax credit set to expire Nov. 30. It also creates a tax credit up to $6,500 for buyers who have owned their current homes at least five years.
To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.
"In our view, that's the kind of government action that needed to occur to continue to stimulate the housing market," said Greg Burger, co-principal of RL Brown Housing Reports. "We believe it will be a positive catalyst in the market moving forward through the end of this year and into next year. Prices are at historical lows ... and this would be some added incentive to go ahead and make the move sooner rather than later."
The first-time homebuyer tax credit has meant higher sales for Taylor Morrison, which has houses under construction at its Stratland Estates community in Gilbert.
"We've had a number of people who are taking advantage of it, and I think our closing numbers for the month of November reflect that," said Pierrette Tierney, vice president of sales and marketing. "Our largest month of the year, which typically is December, by far is going to be November this year ... with everybody trying to get in there before that Nov. 30 deadline."
The expansion opens the new home market for more people, she said.
"There's a lot of people who are recognizing that right now, even outside of the tax credit, is a great time to buy, and then the tax credit is just the cherry on the top," Tierney said. "Our sales volume has remained quite steady into a longer period of time than we typically see in our kind of seasonal industry."
Buddy Satterfield, president of Shea Homes, said the tax credit increased his sales by 20 to 25 percent. Shea has numerous homes under construction across the East Valley.
"We saw a big drop-off in sales when we couldn't deliver (in time for the deadline)," he said. "That's the big problem for builders. You have to sell it and start the house, and deliver it by a certain date, unlike the resale market, where you can take it right up to the wire."
The tax credit has been good for the economy and helped create jobs in the construction industry, Satterfield said.
"I think (the expansion) will help," he said. "I think there's folks out there who, maybe this will be just enough stimulus for them to say 'we need that extra bedroom' or 'we want a different floor plan,' or 'a different location,' and it could spur them to make a purchase. We'll have to wait and see.
Obviously we prefer it to have been a larger amount, but we're grateful for it."