Home Sales Springfiled Illinois Sink to Record Low
Hopefully the housing markets cash for clunkers hangover, following the expiration of the home buyer tax credits, has ended. I believe it has and we are now evolving into a new market until there is an economic recovery where jobs are being created.
Here are the unofficial numbers for the Springfield area for July 2010. Closed home sales of 233 down 43% from June, and down 39.5% by 152 sales from July of ’09. Sales pending of 341 up by 19% over June, and down 22.85% by 101 from July of ’09. The median sale price of 6,000 down by 8.22% from July of ’09. Year to date the median sale price is dead even with 2009 at 0,000. The official numbers will be released from The Capital Area Association of Realtors the last week of the month.
The 233 closed home sales in July is the lowest on record. The association’s records only go back to 1997. In fact in 1997 there were 210 closed home sales in July, however at that time the Taylorville and Jacksonville associations had not joined the Springfield association to form the Capital Area Association. When you deduct Christian and Morgan county from the 233 July sales there were only 191 sales in Sangamon, Menard, and Macoupin counties in July. Those are winter not summer numbers.
The good news is that we have reversed trends from the bottom in May and June for sales pending, but there’s little consolation when the rebound only brings you up to being down by 23% from last year. I believe we have evolved now into a new market as a result. I predicted in June that we would have a bump of activity in July, and we did with sales pending climbing three weeks in a row to the best in two months with 99 sales pending during the last week of July. The first week in August there were only 72 sales pending a five week low.
Looks like the market is going to play out just as I feared and predicted. It’s going to be a slow but steady market for the remainder of the year with the exception of a little bump in activity following Labor Day. Probably along the order of our July bump. This in spite of interest rates falling below the basement. It is truly an incredible time to be a home buyer. I guarantee that one day you will be telling someone; you wouldn’t believe what the interest rates were back in 2010!
I’m sure most of you heard all the economic reports this week, and it is simply not good. The claim that we are in a recovery without jobs being created rings hollow. The Department of Labor reported that weekly initial claims for unemployment jumped 19,000 to 479,000 a three month high. The unemployment rate for July remained at 9.5% in spite of a loss of 131,000 jobs which means hundreds of thousands of people fell off the rolls and are no longer being counted. The 71,000 private sector jobs created in July was below expectations and well below the 200,000 a month needed to begin adding jobs and lowering the unemployment rate.
In other economic news reported this week from the headlines; Laffer: Taxing Rich Will Kill Recovery; Factory orders drop for second straight month; Economic recovery falls to thrifty shoppers; Bernancke: Economy has long way to go; State recovery painfully slow; Fannie Mae requests .5 billion in taxpayer aid; Fourth straight month for weak retail sales; Consumers cut back on credit cards again; and so went the economic news this week.
Another headline I found to be incredible; Obama praises rebound of auto industry. Where did the president make his announcement? At a Ford plant, a company that didn’t take any bailout money. Saying that 55,000 jobs in the auto sector have been created is true, but what wasn’t mentioned was that followed a loss of 300,000 jobs following the government buyout of GM and Chrysler. Tens of thousands lost jobs as dealerships were ordered closed by the car czar. Locally after over 50 years Guiffre lost the Buick dealership for no apparent reason.
Good news this week from the Gulf as the Deep Horizon well leak has been plugged stopping the flow of oil. The bad news is that the Obama administrations moratorium on off shore drilling remains in effect in spite of two courts ruling that action was unlawful, and oil experts along with scientists saying the moratorium is unnecessary has caused tens of thousands in the oil industry to join the ranks of the unemployed and has placed 30% of our domestic oil supply out of production. This doesn’t make any economic sense any time let alone during a recession.
The point folks is the economic policies coming out of Washington do in fact have the boot upon the neck of businesses in the U.S. and especially small businesses, the engine for job growth. As long as these policies continue there won’t be a recovery.
Here’s the facts; wealth redistribution kills wealth generation. Over regulation kills businesses. That’s exactly what is happening in our economy today. Until those policies change there won’t be any meaningful job growth and millions will remain out of work. The 71,000 private sector jobs that were created in July show the strength of U.S. businesses to grow jobs in spite of government’s boot on their neck. Just think what would happen if that boot was removed from the neck of businesses.
Uncertainty has businesses frozen in place. The costs of Obamacare are starting to come into focus and will be much more expensive than we were told. The costs of the new financial reform bill remains unknown. Tax increases appear on the way for the wealthy which are primarily small business owners. Carbon taxes or Cap and Trade remained unresolved but represent another major cost to be added to businesses. In an environment like this there won’t be any job growth soon.
The newly evolving housing market will be substantially slower than recent years, including 2008 when the financial crisis hit. I predicted in December that home sales would fall modestly by 3% to 4% to 3500 to 3600 home sales this year. That may have been optimistic considering the current trends. Should this trend evolve into the norm then we could see home sales slow to near the 3000 mark or below by next year. That would take us back to levels of the late 1990′s.
Congratulations to builder’s Mike Von Behren, and John Stites. Both wrote letters to the editor that expressed their concern regarding over regulation from EPA that increases their costs to do business substantially, and regulations that will put builders and contractors out of business. Something we’ve reported here, validated by business people who bear the brunt of government regulations.
To conclude today’s weekly observations I would like to quote Milton Friedman who would have been 98 last week, quote; “Fortunately we are waking up. We are again recognizing the dangers of an over-governed society, coming to understand that good objectives can be perverted by bad means, that reliance on the freedom of people to control their own lives in accordance with their own values is the surest way to achieve the full potential of a great society.”
Milton Friedman wrote that quote in the book ‘Free to Choose’ in 1980 when Barack Obama, who celebrated his 49th birthday this week was still a teenager. Apparently he never read that book. Too bad, because today we need to awaken again to stop the over-governing of our society, that is killing our free market economy and keeping us from our potential as a society, just as happened in the Carter era.
The opinions expressed here are solely those of Fritz Pfister, or identified sources, and not necessarily those of RE/MAX Professionals of Springfield, or RE/MAX International.
Fritz Pfister is a real estate broker in Springfield Illinois, hosts a 2 hour live radio real estate talk show ten to noon central on Saturdays on AM970 WMAY streaming live at WMAY.com. Fritz was voted Best Realtor by readers of The State Journal register three consecutive years. Fritz’s website: SpringfieldHome.com
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