Weekly Observation for August 29, 2009
August 29th, 2009This past week presented us a lot of news as the economy searches to find its footing. Unemployment rates for the state, and Springfield. A report on household income and savings rates. The national report on new home sales. Although not officially reported, the number of home sales locally for August, that you receive here weeks before release.
A look at unemployment. It can’t be overstated that going forward toward economic recovery how important jobs are to the housing market. It’s simple, people without jobs, and many concerned about losing their jobs, don’t buy houses. The state reported the 26th consecutive monthly increase in the unemployment rate up to 10.4%. The city of Springfield was up to 7.4% the second lowest to Bloomington in the state. We should count our blessings, however realize unemployment is up 1.1% over last year. Unemployment is projected to rise above 10% by spring nationwide.
Household income remained flat for July which was expected to rise. Household income has remained flat or fallen eight of the preceding ten months. Only federal government employees realized income gains. The household savings rate dipped to 4.2% in July from 4.5% in June, but was still up 400% from the lows in 2008. People are scared and are saving their money. Consumer spending will remain low.
New home sales posted their fourth straight monthly gain which is good news, however when placed in proper perspective, remains down sixty percent from the peak. Locally the city of Springfield reported the first monthly gain of the year for single family building permits in July. Through the first seven months of the year there have been 49 permits issued down 23% from 64 in 2008. Locally new home construction consists primarily of custom building jobs, and little if any speculative building. Although good news, new home construction remains at 27 year lows.
Reported through the end of business on Friday closed home sales in August were up 4.7% from last August. This will be the third consecutive monthly increase year over year. The number of home listings under contract continue to run significantly ahead of last year which provides hope that September will finish up as well. Year to date closed sales are down by 114 or by 4.6% due to the weakness in the market during the first five months.
Last week I shared with you the seven dangers facing the economy; the high risk for hyper inflation and higher interest rates, the national deficit obstructing economic expansion, Cap and Trade legislation, the cost of the proposed health care reform, rising unemployment, the high probability for tax increases for everyone, and the rising number of foreclosures.
Due to the serious threats these seven dangers pose to the economy, the first time home buyer tax credit due to expire December 1, and record low interest rates; these next several months may present the best opportunity for you to be able to sell a home, and certainly the best opportunity to buy a home for the foreseeable future.
The market continues to favor buyers, however is trending toward a more level market with the inventory of homes for sale down 18% to 1629 from 1995 last year on this date. Sellers continue to have plenty of competition, and only 2344, or 43.7% of the 5260 home listings having sold and closed this year. The 455 home listings under contract are up 23.9% from the 367 last year on this date, however the percentage that are closing is down this year due to more rejections during underwriting, and a startling uptick in the number of homes that don’t appraise for the sale price. A home listing under contract today is the most difficult to get to closing than during any of my nearly 23 years as a full time Realtor.
One of the seven dangers facing the economy, Cap and Trade legislation has become a hot topic again this past week. In today’s SJR guest editorialist Dave Sykuda of the Illinois Petroleum Council announced a rally to be held this coming Tuesday September 1. Twenty five Associations and trade organizations are uniting to protest this economically devastating, and liberty denying legislation. Leaders from The Illinois Farm Bureau, Mid-West Truckers, National Federation of Independent Business, The Illinois Home Builders Association, and numerous rural electrical cooperatives will speak to the impending economic devastation that will follow a passage of this unnecessary legislation. The public is invited on Tuesday September 1, at The Crowne Plaza Hotel in Springfield beginning at 11:30am to 1:30 pm.
For you who are interested in learning more about this subject I recommend going to Investor’s Business Daily on the Internet and reading their series on Carbongate. They have documented the plight of Dr. Allen Carlin, the EPA research analyst at The National Center for Environmental Economics.
The EPA had been working on a study on an “endangerment finding” that would say carbon dioxide was a dangerous pollutant. Dr. Carlin’s research showed that “available observable data …invalidate the hypothesis” that humans cause dangerous global warming. When Dr. Carlin requested his study be forwarded to the EPA’s Office of Air and Radiation which directs the climate change program, his director Al McGartland forbade the delivery of Dr. Carlin’s report, and stated in an e-mail “The Administrator and the (Obama) administration has decided to move forward on endangerment, and your comments do not help the legal policy case for this decision….I can only see one impact of your comments given where we are in the process, and that would be a very negative impact upon our office.” Apparently the EPA said to hell with the facts, let’s give the administration the result they want.
In other words ladies and gentlemen when a career employee who holds a doctorate in economics with an undergraduate degree in physics tells his boss that evidence does not support the intended result the administration and EPA desired, he is ordered not to share this information with anyone outside the agency.
In my opinion the government is commiting and perpetuating a fraud of historic proportion upon the citizens of this country. This is evidence the government does not care about the environment as much as about controlling your life. All based upon what is at best a disputed hypothesis, and in my opinion a down right hoax, this thing called man made climate change. Is there climate change? Sure, but does it constitute a crisis? No.
Credit needs to go to the Competitive Enterprise Institute for discovering the Carlin story and e-mails documented in the EPA cover-up.
Join The Alliance for Jobs and Affordable Energy Tuesday, September 1 at the Crowne Plaza Hotel. You can help by showing support and signing a petition to vote down this dangerous legislation. Let Senators Durbin and Burris know how you feel. Of course if you support this legislation you are welcome as well to voice you opinion. Please bring any substantiated, factual evidence that proves there’s a crisis worth giving up liberty, losing millions of jobs, and self inflicting grave financial harm during a recession.
If this legislation passes the housing market will suffer. That means the value of your home will decline, the ability to sell your home will decline, and the housing industry, which is key to recovery, will remain stagnant. Simply put, if this legislation passes, there won’t be a recovery. At best the economy can maintain the same as today, but somehow I believe you’ll be looking back on the good old days of 2009.
The opinions expressed are solely those of Fritz Pfister and not those of RE/MAX Professionals of Springfield, or RE/MAX International.
