The $8,000 First Time Home Buyer Tax Credit ($6500 for others who qualify) has created a little bit of a dilemma for Colorado Springs home builders (or for that matter, all builders, nationwide). With the housing recession not fully over, many have been either unwilling or unable to build a lot of inventory homes. After all, when credit is tight, it is just not that easy to be borrowing millions to build houses that are taking too long to sell. On the other hand, the tax credit program has some deadlines that create a logistical problem.
Most Colorado Springs builders need 4 to 6 months to start a house from scratch and finish it. Since the tax credit expires 6/30/2010 (you have to close by then), there is really only about a 6 week window left (as of this writing 1-20-2010) to start a house from scratch and have it still qualify. Starting a bunch of inventory homes can get them a jump start on the process (the contract has to be written and accepted by 4/30/2010), but it is risky, because if they don’t sell, it ties up a lot of credit and capital. Picking the models and lots to target is tricky as well, although there is some mathematical guidance here. Since FHA (the most common civilian financing tool right now) requires a 3.5% down payment, the $8,000 credit translates into the down payment on a $228,500 home. My guess is that we’ll see the most ‘spec homes’ targeting that price range. Frankly, we can use more affordable new homes for sale in Colorado Springs!
For more information on new homes, please visit the New Construction section of our web site, or call me at 719-590-4768.