The most intriguing provision in the massive Housing and Economic Recovery Act of 2008, just signed into law by President Bush, is the $7,500 tax credit for first-time home buyers. It's a stimulus that could go a long way toward ending the malaise that now grips most housing markets from coast to coast. But in order to benefit from the initial burst of sales the tax credit may induce, you'll have to be able to move buyers into their new homes before July 1, 2009 — the law requires buyers to actually take title to the home by that sunset date and not just sign a sales contract.
That means you'd better already be well-positioned in the entry-level market if you want to grab some of the 2 million home buyers NAHB economist Rob Dietz expects to claim the credit on their tax returns for either 2008 or 2009.
“The bill initially called for a sunset date of April 9, 2009,” says Dietz. “NAHB fought hard to get that extended through the end of June 2009. But clearly, the tax credit will have its biggest impact in the existing home market, where it should help break the log-jam that's created huge inventories of homes on the market.”
The multiplier effect of the tax credit should benefit move-up builders, probably in the second half of 2009, as stabilizing home prices and tax credit-induced sales in the existing home market bring shoppers back into model homes in the move-up market. But if you want to actually use the tax credit to sell new homes, get cracking now. It will mostly impact sales this fall, not next spring.
The clock is ticking toward that deadline for June deliveries, but established entry-level builders could have big sales this fall. — Bill Lurz
Want the basics? Read HUD's FAQ page for a rundown of the what the Housing and Economic Recovery Act of 2008 entails.
Lenox has named David Pirkle to be its new president of industrial products and services, Lenox. Pirkle will report to Bill Burke, group president of tools and hardware, Newell Rubbermaid. Before his new position, Pirkle was president of Amerock.
WCI Communities Files For Bankruptcy Protection
WCI Communities canceled its restructuring plans with outside parties. The company owes $125 million in convertible senior notes that were due Aug. 5. Because the company failed to obtain the money to pay the notes, WCI has recently filed for Chapter 11 in Delaware. The firm plans to continue operating under Chapter 11, but the future is uncertain for the company.
As if Technical Olympic USA didn't have enough problems with its Chapter 11 bankruptcy reorganization, the company has run into an expensive delay — a $1 billion one. The company-secured lenders are facing complaints of fraudulent lending practices from unsecured creditors. The complaints allege the lenders forced certain TOUSA subsidiaries to unfairly guarantee about $800 million in debt related to the company's Transeastern Homes joint venture.
The International Monetary Fundestimated in late 2007 that losses on U.S. assets from the subprime crisis and the subsequent fallout would be about $1 trillion. The organization is sticking with this number despite the U.S.'s recent major banking problems.
Centex brings Efficiency to the Masses
Centex Homes announced some big news: homeowners can now tap the Centex Energy Advantage, a package of energy-efficient features that will be standard in all Centex homes starting January 2009. One unique feature: each home the company builds will have an energy monitor.
Home Builder Faces Fraud ChargesC. Scott Everett of Scott Construction Co. and his wife are facing multiple counts of racketeering, fraud, embezzlement, forgery and tax evasion, according to an announcement made by New Mexico's Regulation and Licensing Department and the Taxation and Revenue Department. Everett is facing 48 counts; seven counts are second-degree felonies. His wife faces 18 similar counts. If convicted, the couple could spend more than 100 years in jail and be fined more than $100,000.