SOURCE: Wall Street Journal Online

A bipartisan provision unveiled Wednesday by Senate leaders would allow companies, including builders, to apply current losses to taxes paid four years ago, instead of the current two-year carry-back. That would help builders in particular because they can apply losses against the big profits they earned during the housing boom.

Some builders feel that the tax benefit will help them by preventing companies from rushing to sell off land at big discounts so that they can apply the losses to profits from two years ago. They feel that these fire sales are helping to drive down the property values and contributing to the number of foreclosures that are taking place. The National Association of Home Builders also said that the carry-back could prevent small builders from going out of business.

This carry-back is being proposed as part of a legislative package which is aimed at the housing market. It may also help other industries like banks and financial-service firms. They may also be able to apply the measure to the losses that they may experience in 2008 and 2009.

One of the most recent examples of builders unloading properties for a huge discount is Centex Corp and their sale of 8500 home sites. These were sold at 30% of their book value which has allowed the company to reap a $294 million tax refund. The carry-back legislation should help to stem this type of contribution to the falling prices.

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SOURCE: Forbes

New York has historically set record prices for some residential properties and the price per square foot and median sales prices have seen new highs. There is a lot of new construction but vacancies are on the rise. Between the various indicators with the loosening market, job losses, and new construction projects adding to an already growing inventory, these all add to the mix when buyers are looking to make a purchase.

"What happens is that people tend to look at prices as a barometer of the health of the market," says Jonathan Miller, president of Miller Samuel, a Manhattan appraisal company. "But it's really how many people are in the market, and what you're seeing now are people dropping out because of affordability or because they can't get credit."

West coast sellers are faring better. Farther north, San Francisco's conforming loan limit jumped from $417,000 to the maximum $729,750, which makes getting credit a simpler affair for many of the city's home buyers.

The main thing to understand is that job growth, new construction, vacancy rates and the ability to get credit are important measures; the key is that when there are more buyers than sellers it should translate into a quicker sale. Even though this may mean a small or little price gain, it's still a sellers market in some areas.

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