By Garren Shipley -- Northern Virginia Daily Staff Writer Buy a house, get free money. Or at least a hefty tax credit.
Some state lawmakers hope that reasoning will get Virginians thinking about new homes again, and boost the state's slowing economy at the same time.
Del. Chris Peace, R-Mechanicsville, and Sen. Walter Stosch, R-Glen Allen, have both offered bills that would create tax credits for people purchasing homes in 2009.
While they vary in their details, both pieces of legislation would allow taxpayers who purchase a new home to take a tax credit of anywhere from $1,250 to $5,000.
Both have garnered bipartisan support in the House of Delegates and Senate.
"There was a significant decrease of jobs in the construction area," Stosch said. "Anything you can do to help stimulate home buying would be a step in the right direction."
Building permits issued in the Richmond area in 2008 were scarcely a third of what they were in 2006.
Virginians as a whole simply aren't buying homes at the pace they once were, a point dramatically illustrated by statistics compiled by the Virginia Association of Realtors.
Statewide, home sales took a solid lick in the third quarter of 2008, dropping 9.2 percent, while median prices climbed 1 percent.
Locally, the numbers were much worse. In Shenandoah and Page counties, total sales were down 34 percent over the same period in 2007 with prices down by 16.3 percent.
In Winchester, Frederick, Clarke and Warren counties, sales climbed by 10 percent, but prices fell by 24.9 percent.
Virginia's $3 billion budget shortfall could make a tough sell of the idea of sending more money out of the treasury in the form of tax credits.
Nonetheless, "realizing what's really happened in that industry, even though we're in a budget crunch, it seemed to me that it would be an appropriate time and to try to recover some of those jobs in Virginia," Stosch said.
"My argument is going to be that it's positive, not negative," Stosch said. About 80 percent of the state's revenue comes from individual income taxes or sales taxes -- two areas that would benefit from higher employment in the housing industry and home-related spending.
Budgetary impacts could be minimal as well.
Unlike Stosch's credit, Peace's would have to be repaid over years. But floating that money to home buyers for 10 years gives the state a chance to collect the grantor's tax and recordation taxes.
It also has the potential to get home buyers spending again on things like furniture and other home goods.
"When you build a house, 55 local businesses are involved," Peace said. "You could come out as a wash."
Home builders, Realtors, nonprofits and others agreed that encouraging home purchases could be a help for an industry in serious trouble.
"It's not a silver bullet," Peace said. "None of them are silver bullets, but it's something that will help housing now."
Giving home buyers an additional $2,500 in tax credits might not seem like much, but it could have a very powerful psychological impact when coupled with an existing $7,500 federal tax credit for first-time buyers.
Legislators return to Richmond on Wednesday.
* Contact Garren Shipley at firstname.lastname@example.org