Fritz Pfister

This past week was chock full of real estate news. On Tuesday the SJR reported a story on how the home building market has changed. They reported that building permits for single family homes were at the lowest levels since at least 2000. In fact the 97 single family building permits was the first time since 1982 that the number of permits fell below 100.

A little history for you about home building in Springfield. The hay day for building of single family homes was in the 1990’s not the recent sellers market from 2001 through 2006. The record year was in 1993 when 595 permits were issued, compared to the high of 396 in 2004. The number has steadily declined since.

This is only for Springfield which includes Panther Creek, Piper Glen, North Lake Shore, Lake Point, and Lincolnshire subdivisions which fall within the Chatham school district boundaries., however does not include all the new construction in Chatham, Rochester, Sherman, and other outlying areas.

Pardon me while I make a correction. I stated here a couple of weeks ago that there were nearly 500 permits issued in 2005 for single family homes, compared to 97 in 2008. There were 279 in 2005. There were nearly 400 in 2004 compared to 97 in 2008, which is what I should have reported. I apologize for the mistake, however the point is clear, single family home construction was down 75% in Springfield in 2008 compared to four years earlier.

Yesterday the page one headline was; Which way are state, local economies likely to go? A subject we have covered here on several occasions the past several months. CAAR President Nancy Long is quoted as saying “I think we’re going to be cautious and call it a turnaround, but I think the next two or three months are going to tell the story.” She was referring to the 13.4% increase in home sales in March that we reported here three weeks ago.

My predictions here have been similar, that March through May and hopefully into June would probably be the best months for home selling this year. Last week when sales pending went above 100 for the week I upgraded my outlook from hopeful, to cautiously optimistic.  Great news, sales pending exceeded 100 for the second week in a row for the first time since the weeks of May 17, and 24 of 2008. We needed it because sales pending are down 6.4% from last year on this date, while closed home sales in April through the 24th are down 20% from April 2008. We’ll report here next week April home sales following end of month closings.

More good news, home sales nationally were down while we were up in March. During normal market conditions Springfield seems to run opposite the nation. Reports indicate most of the sales activity were from the sales of deeply discounted foreclosures, with traditional sales making up the minority.

The record low interest rates are the key to the current home sales activity. Jobs will be the key for future activity. In today’s paper it was reported that the Chamber’s Q5 campaign reported a loss of 500 jobs since its inception in 2006. I consider this good news in light of the national, and state economies.

Please bear with my redundant pronouncement that this is a once in a lifetime window of opportunity. Record low interest rates, huge selection, tax incentives, and extremely reasonable prices. Families that have shelved plans to make a move now, may be making a mistake by missing this opportunity.

Why? Just a little bleep in today’s paper regarding an increase in oil prices. One important sentence tells you all you need to know; Concerns that the U.S. bank bailout will spark inflation sent money flowing to hard assets like oil.

These are historical times. Our government is gambling with our monetary future by infusing trillions of dollars into financial markets, and spending more money that it does not have than at anytime in our history. In fact in less than 100 days of the current administration our government will be borrowing more money than all other administrations combined since our founding.

The gamble is that this unprecedented spending will stimulate the economy which will generate enough growth in the GDP that tax revenues will increase to cover the debt. We’ve got only one chance to be right. The consequences of being wrong could prove to be catastrophic.

If the projected growth in revenues to pay this debt does not materialize where will the money come from? Three sources. First borrowing the money by selling treasury bonds. Who will buy them, and at what price? With our national credit rating falling countries like China will want significantly higher rates of return due to increased risk. This will drive up interest rates domestically on everything we buy from homes, to automobiles, to credit cards.

The second choice will be to raise taxes on all income brackets which won’t be politically popular. If taxes are raised across the board then the disposable income of consumers will be significantly reduced which will result in less consumer spending, which in turn leads to slower economic growth and higher unemployment.

The third choice to pay back this massive debt will be to print the money which will result in rampant inflation. In order to fight inflation remember what Volcker and the Fed did in the 1980’s? Raised interest rates. In the 1980’s interest rates went up to 21%, unemployment was nearly 11%, and inflation ran at double digits for several years.

This is why I am shouting from the roof tops to all that will hear; this may be a once in a lifetime opportunity to buy a home at these interest rates and prices, and probably will be. My advice is for anyone who is remotely considering buying or selling a home, get out there, and get out there now. I remember the 1980’s all too well. If you procrastinate and don’t take advantage of this historic opportunity, it won’t be because I didn’t warn you.

Make this a great week from Fritz and Kristie Pfister and The Pfister Success Team of RE/MAX Professionals of Springfield. Thinking of selling? We need listings for our team to market, our 20 closed or pending home listings has our inventory of homes listed for sale at record lows, while the MLS has the second highest inventory of homes for sale on record. Call 652-7653 if you would like to employ our proven marketing systems.

The opinions expressed are solely those of Fritz Pfister, and not RE/MAX Professionals of Springfield or RE/MAX International.

There were some encouraging signs from within the local housing market, and some flat out good news this past week. My view of the condition of the local housing market has improved from hopeful, to cautiously optimistic.
Two encouraging signs this week were the continued decline in the number of homes listed for sale, and home [...]

On my weekly radio program the warning was issued in October of 2005 that the supply of homes for sale had crested the record high. While numerous home owners, builders, and Realtors were unaware, remaining in a state of false euphoria about record numbers of home sales, and rapidly rising prices, reality was approaching.
In 2005 nearly [...]

This past week my family traveled over the river and through the woods to Grandmothers house in Ohio. Taking a week off following a long winter working in the real estate business was a welcome break. Catching up on the local news it was also a welcome break to read from Friday’s SJR that the president [...]

With Spring and Easter comes new life and new hope. The burst of activity in the Springfield Illinois housing market which began mid February shot preliminary closed home sales figures up 12.6% for March ‘09 over March ‘08. This pumped new life into the housing market, and saved the first quarter following dismal sales in the [...]

What a week. Do you remember the famous line from Hogan’s Heroes? Interesting Klink, verrrry interesting. That pretty much sums up the past week.
The Greater Springfield Area Chamber of Commerce held its annual business connections this past Thursday. They held, for the first time, a speed networking session in which I participated. It was a [...]