California is broke? California is offering $200 mil in homebuying credits.

BetterThanEver · Mar 26, 2010

I thought California was broke and was begging the federal government for money. The politicians are now giving $200 million away in housing credits.
Can you say bankruptcy?

http://blogs.wsj.com/developments/2...x-credit-will-home-buyers-stampede-for-18000/

WSJ said:

By Dawn Wotapka

Tuesday, we told you that the (financially troubled) state of California is poised to offer home buyers up to $10,000 to get off the fence and to the dotted line. The $200 million program, split between first-time buyers of existing homes and new units, should keep the Golden State’s sales moving along post spring-selling season.

But, it might not get off to a peaceful start on May 1: Get ready for a stampede early on as some buyers rush to overlap with the federal tax credit that’s dangling as much as $8,000 to buyers. (Yes, that’s up to $18,000 for buying a house.)

For the federal incentive, contracts must be inked by April 30, while closings have to happen by June 30. The California credit covers closings on existing or new homes on or after May 1, leaving a short window for double dipping. “We already anticipated increased contract activity in March and April due to the federal tax credit with scheduled closings in May and June,” writes Credit Suisse builder analyst Dan Oppenheim. “These buyers will now be eligible for both the federal and state credit and will likely consume a significant piece of the state credit given the first-come, first-serve allocation.”

He estimates the tax credit will benefit about 14,000 new-home buyers, lasting as long as five months. KB Home and Lennar could benefit the most given “their outsized exposure to California at 44% and 25% of ’09 revenues, respectively, vs. the 20% group average.”

Given that the state’s existing sales dwarf new sales - 2009 saw an average of 42,500 closings per month - that allotment should be snapped up in about a month. Stampede, indeed.
Click to expand...

DCkid · Mar 26, 2010

BetterThanEver said:

I thought California was broke and was begging the federal government for money. The politicians are now giving $200 million away in housing credits.
Click to expand...

Yay! More programs to keep home prices artificially high!

I think I'll wait for the tax credits to expire, the interest rates to rise, and the flood of shadow inventory to hit the market before I buy my first home.

Hopefully after all that home prices will be down to where they should be.

Forums

California is broke? California is offering $200 mil in homebuying credits.

BetterThanEver Member

DCkid Member

Share This Page

About ClutchFans

Rockets Content

Support ClutchFans!