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San Fernando
Wednesday, Feb 21, 2024

Tax Credits Provide Boost to Builders

Home builders are very excited about new state and federal tax credits being offered to first-time home buyers in California. While the federal tax credit of up to $8,000 can be used to purchase any type of existing residence, the state credit of up to $10,000 can only be applied to the purchase of a brand new home. Both are restricted to first-time buyers who will occupy the residence themselves. “We think it’s a positive thing,” said Eric Elder, senior vice president of marketing and communications for Ryland Homes, based in Calabasas. “We’re glad that they’ve actually targeted the new home industry for specific help.” The San Fernando, Santa Clarita and Conejo valleys had an inventory of about 788 new homes (including condominiums and townhomes) at the end of December, according to data provided by the Building Industry Association of LA/Ventura. In that month a grand total of 13 new homes were sold in the region, down from 100 in April of 2008. Homebuilders applaud the sense of urgency created by the provisions of California’s tax credit. Not only does the credit expire in February 2010, the program will end once the $100 million allocated for the credit runs out. In other words, once 10,000 homes are sold, statewide, the credits will no longer be available. “We’re hearing anecdotally from (BIA) members, and it’s only been barely two weeks since the state tax credit was formalized that it is already helping to solidify deals for people who were thinking strongly about making a purchase,” said Holly Schroeder, CEO for the BIA of LA/Ventura. Home builders have also introduced a variety of other programs to give buyers confidence in making their purchase now, in the darkest hour of the economy. Ryland, for instance, is offering a mortgage payment protection program that will make the mortgage payment for up to six months in the event of a new buyer losing their job within two years of purchase. LA Neighborhood Housing Services, developer of a 30-unit project in North Hills, cited two unique programs they are offering. “The 7th Council District has the Hometown Heroes program, which is a $10,000 grant for families who want to live in the district,” said CEO Lori Gay. “The focus is to attract firefighters, police, teachers, health workers, those folks who tend to work in but live outside of the city.” Fire victims have also not been forgotten, she added, thanks to funds from the Community Redevelopment Agency. “Fire victims can come in as if they were a new owner even if they previously owned a home,” said Gay. North Hills Villas, as their Valley development is called, has 18 homes set aside for those of “modest means,” while the remaining 20 are available to all comers. Gay had not yet identified whether the California tax credit could be applied to all of their homes because of the subsidies they already receive from the federal, state and local governments. Ryland’s Elder said that the tax credits, low interest rates, and large selection all combined to make this a great time to buy a new home. New homes may also be less expensive to operate and less toxic than most of their pre-owned brethren thanks to the focus the home building industry has put on increasing energy efficiency and using more environmentally-friendly materials, said Elder.

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