Home Builders Using Tax Credits to Woo First-time Home Buyers

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By Andrea Jares

RISMEDIA, August 28, 2008-(MCT)-Home builders, trying to grow sales in a sluggish market, are hoping that a new law will bring buyers in the door. And many are adding incentives of their own.

Some builders are touting a $7,500 interest-free government loan for first-time home buyers that is contained in the recently signed Housing and Economic Recovery Act of 2008. Buyers have 15 years to repay Washington, and it covers purchases between April 9, 2008, and June 30, 2009.

And many hope to lure buyers, first-time or otherwise, with a controversial down-payment assistance program before it ends Oct. 1. The scheme has come under fire because the buyer has no personal stake in the purchase when the down payment is provided by the seller and transferred through a charity.

Some companies, such as Lennar and Pulte Homes, are matching the $7,500 federal loan by lowering the price by that amount. Holiday Builders is offering the choice of a $7,500 discount or a 5.75% fixed-rate mortgage to qualified buyers.

Arlington-based Wall Homes is speeding up plans to introduce a line of $90,000 starter homes to catch some of the new interest from first-time buyers, said Steve Wall, founder and chief executive. The houses should be ready in North Texas by the end of the year, Wall said.

Builders are making the changes known, meshing them with their advertising campaigns and telling customers at their model homes.

“For customers that want to take advantage of the down-payment assistance, that window is closing,” said Jay Mason, vice president of sales for Pulte Homes in Dallas-Fort Worth. The next few weekends will be important to home buyers seeking to close sales by the Oct. 1 deadline.

The new legislation covers a wide swath of the housing market, including changes to Freddie Mac and Fannie Mae, refinancing distressed borrowers into FHA loans and putting more homes within reach.

The day the law went into effect, the National Association of Home Builders put up a website explaining the changes, said Jerry Howard, chief executive of the trade group. The site has gotten more than 100,000 visits since debuting July 31, he said.

“Clearly, there is a huge amount of pent-up demand around the country,” Howard asserted. He’s also hearing from builders who say the law is boosting their traffic for sales inquiries.

But, he added, “It’s too early to tell if that is going to have an effect on sales.”

Pulte’s Mason said he has heard anecdotally from sales personnel that home buyers are reacting to the news of the $7,500 tax credit plus the lowered price.

Some were thinking about buying a home and will now have an extra push to get them off the fence, Mason said.

“We perceive we have seen an uptick in sales,” he said.

Copyright © 2008, Fort Worth Star-Telegram, Texas
Distributed by McClatchy-Tribune Information Services.

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