With just hours—hours!—left to nab the federal housing tax credit before it expires April 30, the procrastinators are finally taking action.
“We had someone show up last night who told us that their mission was to sign a contract by Friday,” says Jim Bastoni, a partner at Imagine Homes, a green builder in San Antonio.
In Bend, Ore., the phone rang repeatedly at Yelas Custom Homes’ one under-construction spec home, resulting in two offers on the property.
In Las Vegas, private production American West Homes pulled in 20 sales just this week—even after the private builder said it couldn’t guarantee the not-yet-started homes would be ready for the June 30 closing deadline required for the federal housing tax credit. “We will do everything we can,” says Bonnie Hernandez, executive director of marketing at American West. “We’ve hired back construction workers, and our vendors are really good to us.”
Despite the last-minute push, though, it appears as though—for better or for worse—this tax credit extension has only brought a limited sales boost to builders this year.
“Overall, it wasn’t that big of an event,” says Bastoni, whose firm builds energy-efficient high-performance homes in San Antonio, delivering between 80 and 90 homes annually to first-time home buyers, move-up purchasers, and on-your-lot customers.“On a $200,000 house, $6,500 is not going to cause you to radically change your plans.”
So, unlike many big builders, who extended hours at sales offices and built up a considerable spec inventory for any last-minute buyers who might appear, Bastoni simply operated his business as usual. “I wasn’t a big believer that there was going to be a rush of activity in the last 90 days. I mean, it’s an odd conversation. ‘I need to put a house under contract by tomorrow.’ Let’s go back to the question of why you are looking for a new house in the first place and satisfy that first.”
While the tax credit expiration may not be producing a last-minute rush of sales—or so it seems, the combination of that incentive, bargain interest rates, and irresistible pricing does appear to have resulted in improving markets in recent months.
Even in hard-hit Las Vegas, American West is crushing its year-over-year comparisons. “We’ve already done more than double the sales –225--this year than we did all last year,” says Hernandez. “Our numbers are really good.”
“I was at the title company today, and we’ve really seen an uptick locally in last few weeks –traffic, closings, and stuff going into escrow,” says Robert Yelas, who started Yelas Custom Homes in 2006. “The inventory [of homes for sale in Bend] has gone from 16 months to 8 months within one year—it’s starting to have a big impact.”
Another factor may be buyers’ growing familiarity with foreclosures and the hassles of purchasing—or rather trying to purchase—a distressed property. “People may have started looking for a foreclosure, but then the house gets multiple offers, so they get beat out. Or they lose to someone with cash,” Hernandez says. “New homes have really started picking up. I think people are tired of foreclosures.”
Even the real estate agent community in Las Vegas seems to agree: Hernandez says the last several local real estate broker meetings she has attended have recommended that agents “stop waiting” and “sell new homes.”
She and others interviewed for this story remain hopeful that their markets will continue to stabilize, even after the tax credit ends. “We’re banking that there still are buyers out there—that’s why we’re opening a new community: The Reserve at Coronado Ranch,” says Hernandez. “Our traffic has been steady at 400 [prospects] a week.”
They are focusing more on the economic trends in their own areas, rather than the promise of a temporary government incentive.
As such, Yelas expects little change in Bend’s housing market come May 1. “It will expire at the height of home buying season, so I hope houses will continue to sell. I think they timed that appropriately,” he says. “People still want to move here for the lifestyle, and they’re bringing their jobs with them. Every home we build has a home office.”
Bastoni also sounds at ease regarding his sales expectation for the months ahead. “Our sales have been consistent, and our traffic has been good. For us, it’s been more about the relocation into our town,” he says. “BRAC (the military’s Base Realignment and Closure plan, which is affecting communities around the country) will bring 12,000 families into San Antonio.”
This connection will affect Bastoni and his colleagues in another way: active-duty military and their families have an additional year to use this credit. Is this good or bad? “Well, it takes a little urgency out,” Bastoni admits. “But it also extends the tax credit.”
Alison Rice is senior editor, online, at BUILDER magazine.