California Home Buyers Could Get More Help

Sacramento, CA, June 29, 2009--California lawmakers have introduced two bills to raise the cap for the state's home buyer tax-credit program by at least $200 million and to extend the length of the program by at least a year.

The tax-credit program was designed to help clear out newly built homes and to spark new construction.

Under the program, which was approved in February as part of the state budget, home buyers who purchase a new, previously unoccupied home can get a credit valued at up to $10,000 per buyer. The program was originally capped at $100 million and was set to run until March 2010.

But the pool of money for the program is being quickly depleted. The state has received about 9,800 applications requesting $94.7 million of the program's $100 million. Last week, California's Franchise Tax Board, which processes the credit applications, said it would cut short the program as soon as it received 12,000 applications.

As the nation's largest housing market, California is being closely watched as a gauge for the nation's economic climate. Prices soared during the real-estate boom, but the collapse of housing prices has slammed homeowners and scared away many prospective buyers. The rapid response from home buyers in applying for the tax credit could serve as a instructive measure for other states to follow.

The tax-credit program appears to have had little immediate impact on new-home sales.

In March, 2,781 new homes in the state were sold at a median price of $347,900, compared with 4,224 new homes for a median $406,000 a year earlier. In April, 2,717 new homes sold for a median price of $345,990, compared with 3,642 units sold for a median $395,205 a year earlier.