October 29, 2009

Senators favor extending tax credit for homebuyers

WASHINGTON — Senate negotiators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.

The tax credit, which provides up to $8,000 to first-time homebuyers, is set to expire at the end of November.

Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.

The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, said a congressional aide, who spoke on condition of anonymity because he was not authorized to publicly discuss the deal.

Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash.

Senators in both political parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as Thursday, but lawmakers were still haggling over several unrelated amendments Wednesday evening.

Popular bills like the one to extend unemployment benefits often attract amendments that would have a difficult time passing on their own.

Republicans were demanding that they be given a chance to offer amendments to restrict federal aid to the beleaguered community activist group ACORN and on requiring that people receiving unemployment insurance be processed through E-Verify, an Internet-based system that employers use to check on the immigration status of new hires.

Majority Democrats have refused to add the amendments.

October 27, 2009

High Point

October, 2009

Bolstered by low prices and interest rates, national housing affordability on the NAHB/Wells Fargo Housing Opportunity Index (HOI) continued in this year's second quarter to hover near its highest level since the series began 18 years ago.

The HOI showed that 72.3 percent of all new and existing homes sold in the second quarter on 2009 were affordable to families earning the national median income of $64,000, down from the record-high 72.5 percent during the previous quarter and up from 55.0 percent during the second quarter 2008.

The original article can be found in the October 2009 issue of Builder Magazine.

October 14, 2009

Builders Urge Congress To Act On Home Buyer Tax Credit, Appraisal And Lending Issues

October 7, 2009 - The National Association of Home Builders (NAHB) today called on Congress to help housing take a lead role in putting America back to work by taking quick action to extend and enhance the $8,000 first-time home buyer tax credit, resolve appraisal problems that have been slowing home sales and urge regulators to restore the full flow of credit needed by both home buyers and home builders alike.

Though existing and new home sales appear to have stabilized in recent months, NAHB Chairman Joe Robson, a home builder from Tulsa, Okla., told members of the House Small Business Committee that the industry is facing a number of housing-specific headwinds that are continuing to buffet any significant housing recovery.

“Not only are we continuing to feel the impact of foreclosures and short sales in the market, but we’re facing a severe credit crunch for acquisition, development and construction (AD&C) lending,” said Robson. “Meanwhile, the use of foreclosed and short-sale properties as comps is resulting in inappropriately low appraisals that are effectively sinking one quarter of all new-home sales right now. Add to this the fact that demand and home sales are already showing signs of slowing with the pending Nov. 30 expiration of the first-time home buyer tax credit.”

To create jobs and put the housing market and the economy on sounder footing, NAHB is urging Congress to extend the credit for an additional year and to make it available to all purchasers of a principal residence.

“We estimate that this would increase home purchases by 383,000 in the next year and help mitigate the foreclosure crisis by whittling down inventory at all levels of the housing market, setting the stage for a full recovery,” said Robson. “This stimulus alone would create nearly 350,000 jobs over the coming year, which is exactly what the economy needs right now.”

In a recent survey of more than 500 builders by NAHB, 25 percent reported they are losing sales because the appraisal is coming in below the contract sales price. The process has gone seriously wrong because some appraisers are using distressed properties – many of which have been neglected and are in poor physical condition – as comparables in assessing the value of brand new homes without accounting for major differences in condition and quality.

“Any prospective buyer would recognize the differences in the value between a well-kept home and a distressed property that is damaged or not properly maintained. The same should be true of an appraiser,” said Robson.

He said Congress can help resolve this issue by urging the Federal Housing Administration and Fannie Mae and Freddie Mac to adopt and enforce guidance that instructs appraisers on the proper procedures for the use of distressed and/or foreclosed properties as comparables.

Lawmakers can further help put the housing industry back on its feet by exerting their influence on regulators and the banking industry to restore lending for viable home building projects and to take meaningful steps to avoid unnecessary foreclosures on outstanding loans.

“This would provide relief for a major sector of the economy that has suffered because of regulatory overkill and the inability of banks to provide the necessary funding and flexibility that would otherwise keep loans performing as scheduled,” said Robson.

To further promote energy efficiency in new-home construction, Robson called on Congress to make permanent and enhance the new energy efficient home tax credit due to expire at the end of the year. Section 45L of the Internal Revenue Code provides a $2,000 tax credit to a home builder who constructs a qualified new energy-efficient home that is certified to achieve a 50 percent reduction in energy usage.

“As the only incentive in the tax code for energy efficiency in single-family home construction, this program will help to ensure that new homes built today and going forward are highly energy-efficient,” said Robson. “We strongly urge the Congress to make the 45L credit permanent and increase the credit amount to $5,000 to pay for a bigger percentage of the higher building costs that are incurred when making a home 50 percent more energy-efficient.”

The original article can be found at:

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September 1, 2009

Limited Time Offer

Falling materials prices, increased competition have led to lower overall construction costs
Business First of Louisville - by Kevin Eigelbach Staff Writer

There’s an unadvertised sale going on in the construction industry.

Normally, the winning bid for a construction project doesn’t fall below the engineer’s or architect’s estimate of what the project will cost. But that’s happening regularly now, said Dan Noonan, the chief estimator for Whittenberg Construction Co., 4774 Allmond Ave.

“Jobs are coming in at 25 to 30 percent under budget,” Noonan said.

According to Noonan, some clients can save millions on projects as a result of more-competitive bidding and falling prices for some construction materials.

For instance, Whittenberg bid in July on a project to build a campus recreation center at Morehead State University — a project the university budgeted at $26 million. Whittenberg bid $18.9 million, but Cincinnati-based Dugan & Meyers Construction Co. won the contract with a bid of $17.8 million, Noonan said.

“People are just trying to keep busy and keep the doors open,” Noonan said of his fellow contractors

A recent project to renovate the University of Louisville’s Kersey Library, which was budgeted for $6 million, attracted a low bid of $3.4 million and a high bid of $3.6 million, said John Brasch, president of Brasch-Barry General Contractors Inc., 901 Lampton St.

“If someone wanted to build a new building ... probably the cheapest price they could get between now and eternity is today,” Brasch said.

Oversupply of contractors
The “sale” is happening because of two trends in construction. First, the cost of construction materials has fallen drastically, which means contractors can complete projects cheaper.

Second, there is an abundant supply of contractors who need work and are willing to work for less.Sixteen contractors bid on the University of Louisville project, which in normal times would have attracted about six, Brasch said. Early this year, his company went to a pre-bid meeting for a school construction project that attracted 25 general contractors.

“We returned the plans,” he said. “We’ve stopped bidding on public jobs for the time being.”

Preparing a bid takes a lot of time and effort, Brasch said. Most of the projects his company bids on cost from $1,000 to $5,000 just for the bid, he said, and only one bid in five, at best, are successful.

The same trend of too many contractors chasing too few jobs holds true nationally, said Kenneth Simonson, chief economist for the Associated General Contractors of America, an Arlington, Va.-based construction advocacy group.

“Where we used to see two or three bidders for a public job, now they tell me there are 20 or 30,” Simonson said. “And the winner will offer to do (the job) at cost.”

Lack of demand = cheap materials
The lack of demand for new construction also has caused the price of common building materials such as wood and steel to fall, which is another factor that makes it a good time to lock in bids on a construction project.

For example, the average price nationally for 1,000 board feet of the lumber used for framing structures was $238 on Aug. 14, compared with $282 a year earlier, according to Random Lengths, a Eugene, Ore.-based lumber-industry newsletter.

In March, the price fell as low as $195 per 1,000 board feet, which was the lowest price since February 1986, when the price was $187 per 1,000 board feet, associate editor Tim Cochran said.

The current price would look even worse, relative to historic prices, if it were adjusted for inflation, he said.

“Lumber is very inexpensive now,” said Chris Quinn, the executive vice president of the Louisville-based Kentucky Building Materials Association, 201 Townepark Circle, which represents suppliers of lumber and other building materials.

“If a person has the desire and the financial capability, now is an absolutely perfect time to build a house,” he said.Other construction materials also have dropped from a year ago. For example, copper futures were trading at $4 a pound in July 2008, which was an all-time record. But they fell to $2.50 per pound last month, Simonson said.The U.S. producer price index for materials and components for construction stood at 202.2 in June, a 2.1 percentage point drop from June 2008.

Simonson said he believes that overall, the cost of construction materials for 2009 will fall about 4 percent from what they were last year’s levels.

Normally, materials prices are lowest in the winter months, and they spike around March as customers get eager to start construction, Brasch said. But that spike didn’t happen this year until May, he said, and prices since have fallen back.

He is skeptical that the low prices will mean more construction projects, however.

“It’s like the stock market. If you study it, the time to buy is right now,” Brasch said.

“But only the really smart people do that,” he said. “The average Joe only wants to do that when the market is rocking and rolling.

“It’s the same with construction. They are doing it because they have a need, not because prices are cheap. When people are worried about what’s going to happen, they freeze things,” he said.

Situation growing dire
The sale prices for construction projects really are a limited-time offer, Simonson said, because prices could spike next year. And the recession could force many contractors out of business, which might make it less of a buyers’ market.

He has not heard of many general contractors going out of business yet, he said, but many still are finishing projects they began a year ago.

“The situation is getting increasingly dire,” he said. “There are signs of life in the single-family home-building market, but for the multiple-family and nonresidential, the downturn is continuing and even accelerating.”

From January through April, in terms of getting new contracts, business at Brasch-Barry was down about 75 percent from the same period last year, Brasch said.

The company laid off three office employees and six field employees, he said, the first layoffs in the company’s 20-year history.

Since May, however, the pace of attracting new business has picked up, he said, and the company has hired back one office employee and three of the field employees it laid off. The company now has nine office and 38 field employees, he said. This year, he expects revenue to be down about 30 percent from last year’s $44 million.

Revenue at Whittenberg also will be down this year, Noonan said, but it’s hard to say by how much. Last year, the company billed $57 million worth of work, according to the Business First list of general contractors, which was published May 1. Noonan would not comment about whether the company had laid off anyone this year.

The original article can be found at http://louisville.bizjournals.com/louisville/stories/2009/08/24/focus1.html?b=1251086400^1963061&page=2

August 17, 2009

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August 13, 2009

Elite Homes Web Site

The Elite Homes Web Site displays current lot reservations for our seven communities in Louisville, Kentucky.

Bridges of Razor Creek
Glen Lakes
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The Overlook at Beech Spring Farms
The Reserve at L'Esprit

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Kentucky $5,000 new home tax credit

* In Effect from July 26, 2009 to July 26, 2010. The new home must close during this period.

* Purchasers of New Homes during that period will receive up to $5,000 non-refundable tax credit (non-refundable means that the credit will go against a tax liability to the state).

* The new home buyer must live in the home for at least two years or pay back the tax credit to the state.

* There is a total program cap of $25 million. The tax credit program is over when that cap is reached or July 26, 2010 whichever comes first.

* Purchasers are defined as anyone other than first time home buyers.

* The new home must be the home owner’s principal residence. A new home is defined as either detached or attached and never been occupied.

* Within seven calendar days after the purchase of a qualified principal residence, the qualified buyer shall submit via fax a completed application for the new home tax credit on forms provided by the Kentucky Department of Revenue.

* The Revenue Department will create a web site to explain the credit to the public and to keep track of the amount of the program cap dollars remaining.

For more information please visit http://revenue.ky.gov/dyq.htm

Louisville's area's home sales rise sharply in July

Article written by: By Gregory A. Hall • ghall@courier-journal.com • July 28, 2009

Buoyed by the $8,000 federal tax credit for first-time homebuyers , Louisville-area home sales so far this month are up sharply over the same period a year ago.

The improvement — coming on the heels of June numbers showing an uptick over May — is an indication that as the nation's housing market shows signs of recovering, Louisville is gaining with it.

“The first-time homebuyers are making a huge, huge dent in the market,” said Jan Scholtz, president of the Greater Louisville Association of Realtors.

Sales through Monday were up 27 percent over the same period a year ago, said Lisa Stephenson, executive vice president of the Realtors association.

The 1,042 homes sold in July through Monday had already exceeded the 1,015 for the entire month last year, she noted.

Both nationally and locally, the tax credit is being cited as a significant factor in the market's improvement.

The credit is part of the federal stimulus package passed in February and applies to homes bought before Dec. 1.

Realtors say the hope is that as first-time homebuyers help the low end of the market, existing homeowners will be able to sell and move into larger quarters, stimulating sales among the higher-priced homes.

Joe Simms, owner of the Joe Simms Group RE/MAX Associates in eastern Jefferson County, said he tried Tuesday to set up appointments for a client and found four of the seven homes he planned to show had sold.

Because so many of the buyers have been purchasing starter homes, prices still are down, he said, but still, “we've been real busy. … We've had a great month, and I think most of it's due to the $8,000 tax credit.”

Earlier this month, the Louisville Realtors group, which draws chiefly from Jefferson, Bullitt and Oldham counties, reported its members sold 1,175 homes in June, the most since a year earlier and only 1.3 percent fewer than June 2008.

Southern Indiana Realtors reported selling 285 homes in June, a 13 percent increase from a year earlier.

Scholtz said she expects the local market to grow in coming months because consumers are more confident than they were when the housing and financial crises developed. “It's going to continue to gain like this,”Scholtz said. “We are going crazy selling houses to first-time homebuyers.”

Stephenson did not reveal median price figures for July, but agreed with Simms that prices are not up. With so much of the recent activity being among lower-priced homes, median prices haven't been as quick to rebound.

Nationally, sales of new homes rose by the largest amount in more than eight years last month, according to a Commerce Department report this week. Sales rose 11 percent in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000, the government reported.

Low prices and historically low interest rates —– averaging 5.20 percent nationally for a 30-year fixed rate —– have also contributed to sales increases.

“The worst of the housing recession,” said David Resler, chief economist at Nomura Securities, “is now behind us.” And as with the overall economy, the “recovery” is likely to be slow and arduous, he said.

Last week, the National Association of Realtors said that sales of existing homes posted a monthly increase of 3.6 percent in June.

Also, home prices in May posted their first monthly increase nationwide since the summer of 2006, according to data released Tuesday in the Standard & Poor's/Case-Shiller home price index of 20 major cities. The index rose 0.5 percent from April, but was still 17.1 percent below May of last year.

Louisville is not part of the index, but Realtors' figures showed a median Louisville price of $137,000 in May, up 1.1 percent from a year earlier. The median slipped to $136,000 in June.
“I think people are tired of waiting and the rates are still decent,” said Louisville Realtor Sandy Gulick. “I think people have gotten off the fence. I just think that the country is feeling a little bit more comfortable … ”

Reporter Gregory A. Hall can be reached at (502) 582-4087. The Associated Press contributed to this story.

The original article can be found at:http://www.courier-journal.com/apps/pbcs.dll/article?AID=2009907280340