Georgia's House of Representatives yesterday passed, by a vote of 162-4, a bill that, if approved by the state's Senate and signed by its governor, would provide up to $3,600 in tax credits to new-home buyers and would be available to them for six months after the bill becomes law.
A few days earlier, Utah's Senate approved a proposal to give new-home buyers a $6,000 down-payment grant, which would be paid for out of the state's anticipated $10 million cut for housing assistance from the federal stimulus package.
Ever since California included a $10,000 home buyer tax credit in its recently passed budget, other states have been hopping on the bandwagon and considering bills that lawmakers hope will stimulate purchases and revive their states' gasping housing and development industries.
Seeing an opening, at least one state HBA is using the housing crisis to urge elected officials to revisit other issues that builder groups have long contended impede residential construction and economic growth. But it remains to be seen how willing lawmakers are to give builders and developers breaks on such things as impact fees at a time when their states' revenue streams, such as property and income taxes, are being shrunk by the recession.
Builders across the country are aggressively promoting the $8,000 tax credit that the federal government is extending to first-time home buyers on homes purchased this year. But it's apparent that a growing number of states believe that further incentives are needed to get consumers back into the housing market. Hence, they are introducing proposals—some of which builders have championed and even helped to craft—to stimulate the housing market.
Late last month, for example, Illinois builders and legislators stood together to unveil four bills that, respectively, would give all buyers of new homes a $5,000 tax credit, provide developers with property tax breaks, give builders tax breaks on unoccupied houses, and reward banks that are active in the home-loan market.
The bills proposed in Illinois and elsewhere are often being touted as job-creating measures. "If we don't get people back to work, this economy is going to get worse," Linda Holmes, a Illinois state representative, told the Naperville Sun. "We have been fairly fortunate in northern Illinois because our home-building industry has been so strong."
The other major concern is the mountain of unsold homes that keeps rising in several states. In Florida, where by the end of 2008 one in 22 homes was in foreclosure and one in four was underwater, there currently are 300,000 unsold new and existing homes on the market, or a 20-month backlog based on current sales rates. Florida ranked second in the nation in foreclosures last month, according to the latest RealtyTrac data.
At the urging of Gov. Charlie Crist, the Florida House on Tuesday proposed a 50% property-value exemption for first-time home buyers, which would result in a $2,000 savings on a $200,000 home. The exemption would be phased out incrementally over five years. If the Legislature passes this measure and Crist signs it, the bill would be placed as a constitutional amendment on the November 2010 ballot and would require a 60% approval from voters.
Edie Ousley, a spokeswoman for the Florida HBA in Tallahassee, concedes that an amendment is likely to go through some changes before it reaches voters. But something needs to be done, she says, for the state's housing industry that "is teetering on the brink of disaster."
As it supports the tax credit, the HBA is also urging lawmakers to rethink previous measures that builders believe have been detrimental to their health. The Florida HBA's Web site includes among its 2009 "legislative priorities" three objectives:
•Restoring the $440 million that lawmakers "swept" out of the state's Sadowski Affordable Housing Trust Fund over the past two legislative sessions. "By replenishing these funds, lawmakers can maximize the state's ability to help families and senior citizens with down-payment assistance," the HBA wrote.
•Enacting a two-year moratorium on impact fee increases. Florida has the second-highest impact fees in the country, and the Florida HBA estimates that these fees rose by 149% from 2003 through 2007. The HBA is also calling on the state to amend its "burden of proof" standard to eliminate confusion about how trial courts should evaluate impact fee evidence in a legal challenge.
•The era when Florida was adding 1,000 new residents a day is over. To jumpstart the state's growth and create jobs, the HBA wants the state to overhaul its growth management laws, which the trade group claims pose "simply too many barriers" to local businesses. The HBA points specifically for "clarity" so that new construction isn't burdened with paying for existing infrastructure.
"What we're working toward," explains Ousley, "is to convince the state to put Florida’s construction industry in a better position for when the recovery occurs."
John Caulfield is senior editor at BUILDER magazine.