For many residents of Southern California, purchasing their own home can seem like a distant dream. That dream did become a reality for some in recent years as the housing bubble burst and home prices tumbled, a silver lining in the economic struggle that the country and the rest of the globe has been mired in for a while now.
While there have been signs of recovery, it looks like we aren’t quite there yet. Sales of new home construction in Los Angeles and the rest of the country took a dramatic dive in May, surprising some economists who felt that things were turning around for the better. However, this fall in sales is in line with what some others had predicted in light of the expiration of a tax credit offered by the federal government for home buyers.
The tax credit, which helped drive sales and drum up business for general construction contractors, provided those buying their very first home with as much as $8000. Current homeowners were also eligible, with their credit being as high as $6500. While this credit was a boon for those who were looking to purchase a home in a struggling economy, it has unfortunately come to an end. The deadline to enter a contract to purchase new construction in Los Angeles or another area was April 30th, while the deal itself had to be closed by June 30th.
Overall, new homes sold at a rate that was almost 33% lower than sales in April, and over 18% lower than the same month last year. The pace was actually the slowest that it’s been since the numbers started being recorded back in 1963, and this is with mortgage interest rates being the lowest that they’ve been in six decades. It is believed that the end of the credit, as well as continuing fears in a slow job market, are contributing factors.
Despite the lull, there is hope that new homes in Southern California, particularly green construction in Los Angeles, will soon be in demand once more. It is still a buyer’s market for now.
