State housing help might not fit Tahoe market
April 7, 2009
TAHOE CITY “-Exactly one month after enacting a $10,000 tax credit for qualified new-home buyers on March 1, more than $25 million of the $100 million allocated for the credit has been applied for, according to the State of California Franchise Tax Board.
The fact that almost a quarter of the available allocation has been requested, through 2,624 applications, after just a month suggests the credit is having its intended effect. Whether or not the credit will have much of an impact locally, however, is not so clear.
Sue Daniels, President of the Tahoe Sierra Board of Realtors, said the credit’s effect will be greater in areas where new home costs are cheaper ” in the range of $200,000-$300,000 ” as compared to the her region, where a new home averages about $600,000.
“It’ll certainly be a positive thing to point out to buyers,” Daniels said. “But I’m not sure it’ll be something that will trigger our market in that way.”
Daniels said that the affordable duplex housing development in Truckee may be an exception to the rule, since those homes have never been lived in and are competitively-priced with other housing options.
But a further reason why the California credit might fail to make much of a splash in the area is that it requires applicants to use the new home as a primary residence. Many who might be able to afford the cost of a new home in the Tahoe-Sierra region would intend it as a secondary vacation home.
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“You’ve got to remember that a lot of the people that live here year-round may not make much more than $150,000, so most new homes will be out of their price range,” Daniels said.
With lower-priced houses, the credit is a great incentive, Daniels said. She said buyers will opt for a new home if they can get it at a cost relatively comparable to lived-in homes.
“There will still be a few who take advantage of this opportunity,” Daniels said. “But will it stimulate people to buy new homes in our market? Probably not.”
The tax credit, which was aggressively lobbied for by the California Building Industry Association, was approved in the hope of stimulating new home sales in a slumping real estate market where discounted repossessed homes are dominating sales.