Tax credit expires as home sales rise in The City 

An oversupply of unsold condos in has local Realtors pleading with the state Legislature to extend and expand a hefty tax incentive they claim has helped revive The City’s housing market.

The state credit — which has been offered since March 1 of last year and expires today — provides up to $10,000 for each buyer purchasing a never-lived-in single-family home or condo. The incentive has helped boost condo sales in The City during the past year, said John Lee, president of the San Francisco Association of Realtors.

In January, 113 condos were sold in San Francisco as opposed to 78 during the same month in 2009, according to the Rosen Consulting Group, which provides a monthly analysis of The City’s real estate market. Without the credit, 40 percent of buyers would not have purchased new homes, Lee said, citing survey data compiled by the California Association of Realtors.

In addition to the state credit, first-time homebuyers also have been able to capitalize on an $8,000 federal tax credit, depending on their income. That incentive is set to expire in two months.

“This is free money for them,” Lee said.

California sunk $100 million into the tax benefit to spur the housing market statewide.

Gov. Arnold Schwarzenegger is now pushing the state Legislature to sink another $200 million into the incentive package. The bill, SBX64, would authorize the Franchise Tax Board to offer the tax credits to first-time homebuyers purchasing homes that previously were occupied.

The governor recently pushed for the proposal during a news conference at a new Chula Vista housing development where he said there was a 300 percent sales spike last year, with 70 percent of buyers using the credit.

New condos in San Francisco’s SoMa neighborhood can benefit in the same way, Lee said. Boosting the housing market is key to The City’s economic recovery since new residents make local purchases, which injects tax dollars and helps maintain jobs, according to Realtors.

“They buy a new home, they need furniture, they need to remodel, which kick-starts the home improvement business and keeps contractors busy,” Lee said.

Lee said four of his clients rushed to close deals during the past month to take advantage of the tax break before today’s deadline.

Settling into new homes

Condo sales are improving in San Francisco.

113 Condo sales in January 2010
78 Condo sales in January 2009
733 units For-sale condo inventory in January 2010
1,000-plus For-sale condo inventory for most of 2009

Source: Rosen Consulting Group

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