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Home Builders Urge Lawmakers To Extend Tax Credit

New-Home Construction Dips Again in September

POSTED: 6:16 pm PDT October 28, 2009
UPDATED: 8:16 am PDT October 29, 2009

New-home sales dropped again in September, prompting California home builders to urge lawmakers to extend the federal homebuyer tax credit, according to California Building Industry Association.

In the past two months, construction picked back up at the Orion Homes development off Panama Lane and Buena Vista Road.

Tate Garrett, a trencher for Accurate Trenching Inc., said business isn't quite booming but it is definitely consistent.

"There's houses that at this time last year you wouldn't even see. And it's good, it's refreshing, it's a little more like a comfort feeling now, you're not worried about week to week it's maybe month to month now, but it's a sign of hope," said Garrett.

Since the discontinuation of the statewide homebuyer tax credit, the CBIA said there has been a drop in traffic, dragging down new-home construction.

Those in the housing industry fear if the lawmakers don't extend the federal tax credit, which ends Dec. 1, it could be detrimental to new-home sales.

"The real estate market was kind of crippled for a long time, three years it's been broken, and anything they can do to help fix it would be great," said Scott Rivera, a broker for Real Estate Team Inc.

Bob Decker of the Home Builders Association of Kern County said some of the construction happening right now is home builders motivated to beat that December deadline. And in the next six months, Decker said there will be more building, but that doesn't necessarily mean things are turning around.

"There was an artificial boom in permit activity due to the traffic impact fee going up. What happened is a number of builders pulled roughly 400 permits in the course of a month because they knew if they didn't they would be paying another $6,000 a lot," said Decker.

The city council approved nearly doubling the fees from $7,000 to about $13,000 on most residential lots in July.

Home builders who got a permit before the fees increased have six months to build, according to Decker.

Decker said if either tax credit is not extended added on top of these fees, he said, "It will be difficult for new home construction to rebound and move forward into next year."

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