by J. Craig Anderson The Arizona Republic Mar. 20, 2010 12:00 AM
Extending the federal income-tax rebate for first-time homebuyers hasn't done much to boost Valley home sales since the rebate's original cutoff in November, leading some local homebuilders and analysts to think the overtime might have been overkill.
Still, they say something even better is happening: Homebuyers, especially seasonal residents from outside Arizona, appear to be regaining confidence in the Valley's new-home market.
David Kitnick is one of several local builders who said the past two months have produced more sales than any comparable period in the past two years, something driven by out-of-state buyers.
"Other builders will tell you that over the last 60 days there's been a firming of prices," said Kitnick, founder of luxury-home builder Rosewood Homes in Scottsdale. "Prices have actually gone up in the past 60 days."
While a handful of buyers have mentioned the tax rebate, he said, most said they are planning to keep their original homes in the Pacific Northwest, the Midwest or Canada and use the Arizona property as a winter getaway.
"Over the last 60 days, almost three-fourths of our homebuyers have been from out of state," said Kitnick, who has subdivisions in Scottsdale, Goodyear and Peoria.
The promise of a federal income-tax credit has enticed some residents to go house hunting, local real-estate experts said, but it appears that most of the serious rebate seekers bought in September or October, before the tax credit"s initial deadline of Nov. 30.
Congress extended the federal income-tax rebate of up to $8,000 for new homebuyers and
added a second rebate of up to $6,500 for existing homeowners who have lived in their home for at least five years.
While the new-buyer rebate applies to new and used homes alike, existing homeowners must purchase a new home to qualify.
The extended deadline requires homebuyers to open escrow by April 30 and close by June 30.
New-home sales have climbed slowly and steadily since the beginning of the year, which is more likely an indication of rising consumer confidence, word of mouth about the affordability of Phoenix-area homes, and a seasonal buying pattern that crests in the summer and bottoms in winter, said Jim Belfiore, a Phoenix real-estate analyst who specializes in the new-home market.
The recent trend is nothing like the short-term boost homebuilders saw in late summer and fall 2009, which built to a crescendo in October and then fell off dramatically, said Belfiore, president of Belfiore Real Estate Consulting.
"A real slowdown occurred in November of last year," he said, evidence that the initial deadline spurred a number of ambivalent would-be homebuyers into the market.
Now, with six weeks of eligibility left to claim the rebate, sales are up from a year ago but following a more typical pattern of gradual increases as the Valley shifts into home-buying season, Belfiore said.
Lori Tuter, sales manager of the Dolce Vita manufactured-home community in Apache Junction, said the addition of a $6,500 tax rebate for existing homeowners has helped her business in the past few months.
Dolce Vita, a 55-and-older community, does a lot of business with part-time residents, most of whom already own a home.
"Previously, it (the tax credit) didn't really apply to our residents," Tuter said.
Still, because buyers claim the tax credit directly and not through a homebuilder, she said it's difficult to know how many people are actually using it. She said there is a way dual residents can claim the tax credit, but it involves changing their permanent residency and might not be worth it to some buyers.
"We've definitely had some increased traffic coming in because of it," she said.
In general, Belfiore said homebuilders are probably feeling more confident this year even if sales are up only slightly from what they were expecting, because most are operating with less overhead and building smaller, less expensive homes.
He predicts a moderate increase in new-home permits compared with 2009, going from last year's 8,650 permits to 13,200 permits.
"That's not a huge increase, but it will feel better than it actually is," he said.
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