Will the $6,500 'Move Up' Tax Credit Really Help?

The nation's homebuilders may have to wait until next year to start reaping the rewards of the recently enacted $6,500 tax credit for repeat buyers, an industry consultant has warned. While builders who work in the move-up market can anticipate a boost in sales, Southern California real estate consultant John Burns says the burning question is: Will the tax break be enough to motivate buyers to enter the market during the normally slow holiday season? Under the rules, buyers must sign contracts by the end of April and must close on their new digs by the end of June. That gives buyers who are looking at newly built homes plenty of time to shop, but not necessarily enough time to get their choices built. The typical construction cycle is 90 days, so buyers who haven't found a model they like by the end of March may be cutting it close, possibly too close. That's why consultants like Mr. Burns and others are advising builders to start a few homes on speculation. Right now, John Burns Real Estate Consulting's November survey of 265 building company executives is finding "cooling traffic and sales in many locations, particularly those with no spec inventory."