I am going to go out on a limb and predict a surge in housing starts that will last untill June 1st of this year.  Look forward to three months of data that bears this out.  Why will this happen now?  The $8,000 first-time home-buyers credit is a big reason why.

Home-builders have stopped starting new homes since mid October and the levels of inventory is relatively low.  If you sign a contract for a new home today, it will take 6 months for home to be completed and for you to take title.  If you are a first time home-buyer, you must take title by December 1, 2009 or you don’t get the $8,000 tax credit.  A very strong incentive.  That means the house must be complete, the c/o must have been issued by the town, etc.  Work backwards from December 1 and you will realize that you must break ground by June 1st to accomplish this.

I am working with some new home buyers and they are asking contractor to accept a $8,000 penalty for late delivery.  We have not signed anything up like that yet, but it’s coming.

Take a look at all of the homes available as foreclosure and short sales on my website.  Click HERE!

US housing starts in February snapped its streak of declines, increasing optimism in the market. Work began at an annual rate of 583,000 homes, a 22% increase from January.

I have seen an increase in homes on the market over the past few weeks, however, we are seeing the absorption rates declining as more homes are closing.  Many more people are aware of the $8,000 Federal Tax Credit that is available.

I think we are going to see a short term surge in home starts that will continue through the spring.  Any new home buyer needs to close before December 1, 2009 to be eligible for the $8,000 tax credit.  That means there  is a relatively short window if a home is being built to order.  Most home builders have low inventory and are not breaking ground until they have a deposit.  If it takes 6 months from the time you break ground to the move in date, contracts must be signed by June 1.  That leave potential purchasers only 76 days and counting to make up their minds.

 In another positive development, building permits increased 3% in February.  There is a sense, perhaps it is just hope that we have seen the bottom and that we are starting to turn the corner in the housing market.  One robin does not make a spring, so while we start to enjoy the warmer weather, we will be closely watching activity over the next few weeks to see if we are experiencing a true thaw.

 Take a look at the absorption rates.  Click HERE.