New-home sales nationally went through the roof in March, registering their biggest monthly gain in 47 years.
While warmer weather may have been one lure, a bigger draw was the expiration of an $8,000 tax credit for first-time homebuyers and a $6,500 credit for move-up buyers.
To qualify, homebuyers must have a home under contract by April 30 and a sale closed by June 30 to receive a credit.
Evidence of that deadline was everywhere at a Richmond American Homes sales office at Hillside at Meridian Village in Parker — from the signage to the special incentives to the steady flow of customers showing up on a Wednesday afternoon.
Bill and Mary Edds of Topeka, Kan., wanted to buy a home near their son and his family, who had moved into Hillside earlier in the year.
But Bill, a lawyer, wasn’t planning to retire for a few more months, making it inconvenient to close by June 30.
“I just want to go look. What do you want to do?” Mary asked her husband outside the sales office.
“To talk about it some more,” Bill said, rubbing his hand over his closely shaved head. He said the couple was about 75 percent sold on moving ahead.
Sales associate Jennifer Anderson went over the details of what Richmond American was offering under its Last Chance Event from April 16 to April 30.
If the couple put a home under contract by the deadline, Richmond would cover closing costs, which can run 2 percent of the price of a home.
Although the couple wouldn’t qualify for the tax credit, they would get $8,000 off the price of a home, along with money toward a lower mortgage rate if they used the company’s financing.
To seal the deal, they would need $6,000 in earnest money, which they would get back, except for $2,000, if they couldn’t sell their home in Kansas.
“Nothing else is collected until closing, which would be in the fall,” Anderson told them.
Bill’s response: “This sounds like Christmas to me.”
At Richmond’s nearby HorseShoe Ridge development, Dave Pretzer met with sales agent Dwayne Cunningham to put a home under contract.
Pretzer, 29, waited for a specific lot to open up, which prevented him from getting the tax credit, but the other incentives made it worth his time to move forward.
Although it remains a buyer’s market, Pretzer called his efforts to land a foreclosure or short sale among existing homes a headache.
“It was a lot tougher market than I thought,” he said.
Last-minute rush to buy
Initially, analysts predicted the tax credits wouldn’t be as important to buyers the second time around, given that many people rushed to meet the Nov. 30 deadline.
The National Association of Realtors estimates 2 million first-time homebuyers took advantage of the credit in 2009, including 39,800 buyers in Colorado, said spokesman Walter Molony.
The group predicts another 2.4 million buyers will take advantage of the extended and expanded credits, including 1.5 million repeat buyers, who were included after the program was expanded.
As was the case last fall, buyers appear to be waiting until the last minute. A sluggish January and February led forecasters to call for March new-home sales, measured at an annual rate, to be around 325,000.
Instead they hit 411,000, a 26.9 percent increase from February, the largest percentage monthly jump since 1963.
By all indications, April is shaping up to be even stronger.
Richmond, a division of Denver- based MDC Holdings, expected a second rush after the one that hit last fall, said Zane DeHerrera, the homebuilder’s chief marketing officer.
Richmond American built several homes to the drywall stage, including 150 still available across the metro area, that were far enough along to personalize and close on by June 30.
“They key is that we have inventory,” DeHerrera said.
The company also launched its Last Chance Event, which is proving to be the company’s most successful marketing campaign ever, he said.
Sales agents wear white T-shirts with tick-tock, tick-tock in red trim on the back. Customers who followed Anderson through the various models saw those words staring them in the face.
A sign with removable numbers at the entrance of the sales office carried a nine on it — the days left not until Christmas but April 30.
Too few homes for cutoff
Homebuilders say low mortgage rates, lower home prices, available inventory and the tax credit have all helped boost the market.
“Builders delivering homes at entry-level price points have been able to gain the most traction with new homebuyers in metro Denver during the extended tax credit period,” said Cory Hunsader, a regional manager with Hanley Wood.
But many builders, weakened by the market’s collapse four years ago, haven’t been able to build ahead of the demand.
Oakwood Homes, which offers lower-priced homes than Richmond, has recorded some of the strongest sales increases of any metro Denver builder, according to Hanley Wood, which tracks new-home sales activity.
Oakwood has sold 125 homes at its three communities through April 18, leaving it easily on track to surpass last year’s 253 homes sold.
But Oakwood couldn’t afford to build speculative homes, leaving it unable to offer buyers a June 30 closing since late February.
Instead, the company, on signs showing a red, white and blue Uncle Sam, is offering buyers $8,000 in incentives if they sign a contract by May 31 and close by Nov. 30.
Later on Wednesday afternoon at the Hillside sales office, the Eddses have returned, uncertain whether they should come back Saturday to sign a contract.
Anderson, running much of the afternoon, warns them that Saturday will be super busy and that she can get them in before a 4:30 appointment arrives.
As they talk, a woman and her two daughters who recently moved from California wait to ask questions.
Anderson offers them brownies while she and the Eddses hammer out details and options. Other people flow in and out to look at the models.
Eventually, the couple put a home under contract for $346,935.
“We are very excited,” Mary says, as she signs papers. “I will still be a Jayhawks fan, although I will support the Buffaloes.”
As he signs the papers, Bill adds that it has been 22 years since the couple last bought a home.
“I like it when I get to choose my neighbors,” Anderson says.
Bill, who rides motorcycles, jokes that she may change her mind when she hears him coming.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
