Builders stay afloat home buyer tax credit
The home buyer tax credit has certainly reenergized the real estate market.
But the multibillion-dollar housing market subsidy appears to be nothing short of a lifeline right now for battered home builders, with new construction and sales appearing almost totally fueled now by tax credit buyers.
How else to explain the dramatic dip in new home sales in November, which took place as buyers bailed in advance of a looming, end-of-the month expiration of the tax credit?
Of course Congress went on to extend and even expand the home buyer tax credit through April, but the uncertainty was enough to cause new homes sales to plunge more than 11 percent.
Well the link between the tax credit and new home sales is just as strong here in Eastern Massachusetts.
There has been a modest uptick in new home construction and sales in the outer suburbs, I report in my column this week for B&T, with developers and brokers reporting the majority and in some cases almost all their business coming from first-time buyers armed with the $8,500 tax credit. The home buyer tax credit has certainly reenergized the real estate market.
Just take a new townhome development in Tyngsboro, where 29 of 30 recent sales were to first-time buyers taking advantage of the tax credit, Dennis Page, a Realtor with Re/Max Prestige, tells me.
It’s going to be tough for the real estate market when the home buyer tax credit is phased out after April.
But it could be positively brutal for home builders.