House Construction Sales Rise Despite California Foreclosures
Tax credits have once again shown its magic by increasing the house construction sales in California despite the state being one of the areas hardest hit by foreclosures.
Data from the California Research Bureau showed that foreclosures in 2008 were 84,600. However, California foreclosures are expected to reach 237,200 in 2009 and 1.1 million for the period 2007-2012.
The metro area of San Bernardino-Riverside posted a foreclosure rate which is the sixth highest across the country, with one in every 80 properties at auction, in default or repossessed.
These figures did not bode well for the housing market in California. However, one good thing that has come out of this foreclosure crisis is the dramatic decline in prices that spurred a surge in house construction sales.
According to California Building Association President Robert Rivinius, tax credits have done their job of attracting homebuyers which contributed to the increase in house construction sales. Rivinius hoped that the tax credits will continue to have a positive effect on the house construction industry.
In February 2009, house construction sales in Southern California remained in the same level as with previous year, for eighth consecutive months. DataQuick reported that the median home price in Southern
California stopped its 10-month decline in February.
In San Bernardino County, house construction sales last February increased to 2,324, reflecting a rise of 87.1 percent from the same month last year.
Meanwhile, in Riverside County, house construction sales increased by 59.3 percent.
DataQuick noted that bargain hunting homebuyers flocked to California’s affordable neighborhoods. It added that the supply-and-demand in the housing market is starting to normalize.
California offers a tax credit of as much as $10,000 for first-time homebuyers and federal tax credit of $8,000 for new buyers.
Meanwhile, the government-guaranteed FHA mortgages accounted for almost 38 percent of the total purchase loans last month, an increase from February 2008’s 6.4 percent.
On the other hand, despite the increase in home sales, California Association of Mortgage Brokers’ Inland Empire Chapter President Wil Herring warned against hoping too much that the house construction industry will make its recovery now.
California Building Association’s chief executive officer of the Baldy View chapter Frank Williams noted that recession has given home builders the chance to reflect on the strength of the market. He added that the home building industry is starting to stand up again.
