Two new government deals that provide up to $18,000 in income tax credits for those who buy homes this year should help Northern San Joaquin Valley builders sell houses.
At least they hope so.
Home construction virtually has disappeared in Stanislaus, Merced and San Joaquin counties because builders haven't been able to find willing, qualified buyers.
The three counties issued only 88 home building permits during January, compared with more than 1,500 per month during the 2005 building boom's peak. That's caused massive job losses in the construction trades and put many builders out of business.
So lawmakers have sweetened the pot for home buyers to coax them into purchasing homes now.
The federal government is offering credits up to $8,000, and California is chipping in up to $10,000 more. But relatively few buyers would qualify for both because the federal cash is strictly for first-time buyers and the state money is only for those who buy new homes.
That means first-time buyers purchasing new homes priced at $200,000 or more could get $18,000, while current homeowners who buy used houses would get nothing.
"People are excited when we tell them about it," said Mattie Zedlitz, who sells homes at Valley Blossom and Valley Park in Manteca. "We've had four sales in the last week, and our traffic's been wonderful. ... Most of our customers are first-time buyers, so they're getting $18,000."
The result hasn't been as great for other developers.
"I don't know exactly how much these tax credits are going to matter, but it's nice," said Michael Spencer, whose construction company is trying to sell its last couple of "Mansionettes" in Livingston. "Just about anything our government is trying to do is helpful."
While luring buyers with tax credits may tempt some, Spencer said the real issue is lack of funding for mortgages.
"What we're struggling with every single day is credit," Spencer explained. "Our biggest challenge is just getting people approved."
Even buyers with good credit who have loans lined up too often have mortgages denied at the last minute, Spencer said.
The other major obstacle for new home sales is competition from bargain-priced foreclosed homes.
Median home price plunges
More than 11,000 Stanislaus homes have been repossessed by lenders during the last two years. Most of those foreclosed houses have been resold by the banks at deep discounts. That's caused Stanislaus' median home sales price to plunge 64 percent from its $396,000 peak in 2005 to $140,000 this January.
Construction costs, unfortunately, haven't declined nearly that much, so new home prices have a tough time competing.
"I don't think anything is going to help (builders) until we get through all these foreclosures. ... The banks are almost giving them away," said Robert Martelli of JKB Homes, which has developments in Hughson, Denair and Riverbank.
Martelli said that after comparing new home prices with foreclosures, shoppers may conclude that buying a bank repo is a better deal. But he said the two options -- repo or new -- are not equal, considering new homes come with full warranties and are much more energy-efficient.
New home prices also have come down significantly the last three years. In Stanislaus, the median sales price topped out in June 2006 at $476,000, but it fell to $310,000 in December 2008.
JKB Homes in Riverbank start at $239,000 for 1,575 square feet.
"We're basically selling them at cost or below cost just to keep going," Martelli said.
Some of the lowest-priced new houses are selling in Newman, where SCM Homes is offering 1,260-square-foot houses in Park Villas at Sherman Ranch for $119,900.
Even though homes in Ripon are priced higher, sales there are on the rise, according to Rich DePonte who runs sales at the Cornerstone development. He said that's partly because prices have been reduced, with 1,870-square-foot homes now starting at $274,000.
"Our traffic has picked up. We've sold more homes in the last 45 days than we had in the previous six months," DePonte said. Since the year's start, he said, eight homes have sold and three additional houses have been reserved. "We're selling good, but we're not making any money."
Nevertheless, DePonte's builder, McRoy-Wilbur Communities, will open a development next week in Turlock.
The 81-home Cottage Park project will be for "active adults" age 55 and up. Homes in the gated community will be priced between $250,000 and $300,000.
"I don't think the federal tax credit (for first-time buyers) is going to help us," DePonte said, noting that most of his customers have owned homes before. "But the state credit (for new home purchases) definitely will help us."
Bee staff writer J.N. Sbranti can be reached at jsbranti@modbee.com or 578-2196.
RSS
E-Mail
Print
reprint or license
