Weekly Observation for May 30, 2009
May 30th, 2009Ladies and gentlemen please allow me to introduce you to the Springfield Illinois two step. With the national economy trying to find its footing, so does the local housing market.
On Thursday in this weeks SJR a report showed home prices across the nation fell 19.1% in the first quarter, Springfield was up in the first quarter. On Thursday the SJR reported local home sales down in April but prices were up. Across the nation in April? Home sales up, prices down! Then today the SJR reports show the national economy shrank 5.7% in the first quarter, while Springfield unemployment was at 6%. The second lowest in the state, although up from 4.7% last year.
You can get dizzy trying to sort out all these reports. I can see with the local and national reports conflicting how people can get confused about the housing market. Please allow me to clarify what is occurring in the local housing market so you won’t get dazed and confused.
In month over month home sales January and February were down. March was up. April and May were down, and June will be up. There you have it, the Springfield Illinois two step, two months down, one month up. The trend for the first half of 2009.
Check back here next week when I will share with you the final numbers for May and year to date home sales. Here is where we stand as of the end of business Friday. Closed home sales down in May 10.5%, median sale price down 4.1%. Year to date closed home sales are down 7.1%, the median sale price is up 2.9%.
The city of Springfield just released building permit numbers for April and they are as follows; single family 7, two family 5, multi-family 0, commercial 1, and remodeling permits 411. Through the first four months of 2009 single family 21, two family 10, multi-family 0, commercial 6, and remodeling 985.
Speaking with a top developer yesterday and he said this is the slowest for new home sales he’s seen in thirty years. Looking at the permit numbers you can see why.
There are two areas of good news in the market. First sales pending were up in May by 10.7% which is why I can predict closed sales will be up in June. The number of homes for sale have fallen to their lowest levels since 2005 for this date standing at 1676 today.
Home sellers that must get sold can be relieved by the fewer number of competing homes as year to date there have been four hundred sixty one fewer listings taken than through the same period last year. Why has this happened? People are nervous about their economic future. Hence remodeling applications are way up. People are hunkering down by taking advantage of the record low interest rates and remodeling their homes in lieu of selling and buying another.
The area of concern for home sellers that must get sold is the weaker demand. The 1231 closed home sales reported through yesterday are 440 fewer than on this date in 2006, down by a whopping 26.3%. It is good news that the sales pending picked up in May, but you have to keep in mind the Springfield Illinois two step. Will activity slow in June to continue the trend? We’ll just have to wait and see.
With interest rates continuing to hold near fifty year lows, the $8000 tax incentive for first time buyers, and grant money available, one would hope sales would continue to increase. But this is 2009, and nobody knows what’s going to happen. But so far it’s the Springfield two step.
If you must sell a home be prepared for the dance. Now follow the market, take two steps back, take one step forward. Take two steps back, take one step forward. Take two steps back, and oooops you just fell off the dance floor!
The opinions expressed are solely those of Fritz Pfister, and not RE/MAX Professionals of Springfield or RE/MAX International.
