Fritz Pfister

Interest rates are like teenage children, you think you know what they’ll do….but then! Thanks to Curtis Dubay Senior Tax Analyst for The Heritage Foundation for appearing on Let’s Talk Real Estate last week. Curtis believes the low interest rates and low home prices are the reason for improving real estate markets.

In my opinion the first time home buyer tax credit has played a bigger role, at least here in Central Illinois. What does Curtis know anyway? Working out there in D.C. with more sheepskins hanging on the wall than menu items displayed at a McDonald’s drive thru! He doesn’t know how cheap, ooops, I mean how cost conscious folks are here in Springfield Illinois!

With a backdrop of bleak economic news, home sales in our market jumped in September as predicted. Closed home sales were up by 43, or by 13.5% from last September accounting for more than half of the third quarter increase of 82 home sales, an increase of 7.9%. The strength of the third quarter brought the number of home sales this year up to nearly even with last year,  down by only 28 sales or by 1% from 2008. Good news, for now.

The jump in home sales is attributable to a magical combination of record low interest rates, first time home buyer tax credits, affordable home prices, and some pent up demand following 16 consecutive months of declining pending sales entering February of this year.

Why good news for now? All you need to do is read Doug Finke’s front page article in today’s State Journal Register. The State’s revenue was down $340 million from last year, and would have been down $629 million if not for federal money coming into the state. Curious, where does that federal money come from?

Personal income tax receipts down $278 million. Why? Fewer people working paying taxes. Sales taxes down $244 million. Why? People that aren’t working don’t have money to spend, and people that have money are not spending. Families are being conservative with their money. Why? No confidence in the actions state and federal governments are taking. Consumer confidence fell in September.

On a side note Finke reports the only taxes to see any decent gain were liquor taxes, which increased $13 million from a year ago. Why? It is being attributed to people stocking up before state liquor taxes increased on September 1st, and expect liquor tax receipts to fall in the coming weeks because of higher taxes, and people being stocked up. Just like cash for clunkers, and the first time home buyer tax credit prove; tax credits and reductions spur sales activity, tax increases cause sales to decline.

Then in the business section you can read the headlines; “Despite economic recovery, businesses not ready to hire.” Me thinks the AP writers took too much of an advantage of the liquor purchases before they wrote this article. Time to face the facts, there is no recovery until we put people back to work again. People with jobs pay taxes, and spend money. People without jobs add to government spending.

Obama economic policies and spending are not working. The Obama Stimulus plan is an abject failure. Legislation rushed through before anyone could read it is telling the tale today. Employers cut another 263,000 jobs in September, the unemployment rate is up to 9.8%, and over 15 million Americans are out of work. 1.3 million will exhaust their benefits by the end of the year. Millions more can only find part time work. The average full time work week is down to 33 hours. The median income fell 3.9% to $50,000 this year. The middle class and the poor are suffering most. Vice President Biden said this week the stimulus is working. Really? Reminds me of Duck Soup, when Chico Marx said; “who you going to believe, me or your lying eyes?”

Then this week former Fed Chair Greenspan said he expects the economy to actually slow in 2010. What does this guy know? The meager $78 billion for infrastructure contained within the $787 billion Stimulus plan, is scheduled to have a good portion finally released in 2010. That should provide a temporary bump in employment next year.

With the federal government spending about $1.8 trillion more than it took in this year, it was announced that deficit spending in the coming year is estimated at $1.5 trillion. Where’s this money going to come from with federal revenues down over 30%? From more borrowing, printing, and taxing. Money taken by the government that can’t be spent on goods, services, investment, and job creation.

Last week Curtis Dubay said the federal government could help if they would just stop unnecessary spending, and quit talking about how to raise taxes every day. What is congress up to? Passing a trillion dollar health care takeover with $500 billion in Medicare cuts, and $300 billion in new taxes in the house version, paid for by a surcharge on the wealthy, which consists mostly of small businesses. Gee I wonder why these businesses aren’t hiring?

Then in the senate Cap and Trade is moving forward which is nothing more than an energy tax on everyone. Treasury admitted last week that the cost of Cap and Trade would be over $1700 a year for every family in America in higher utility, gas, food, and manufactured goods prices. Gee I wonder why people aren’t spending?

The bottom line is that everything the president and congress has enacted or proposed is hurting the economy, stifling job creation in the private sector,  implementing the fuel for hyper inflation, which will be followed by higher interest rates, and higher taxes for everyone. Inflation diminishes buying power and higher taxes reduces disposable income to be spent on things like, say, oh, houses.

This is not intended for you to translate as doom and gloom. These are the simple facts, and the truth. We may not have seen anything yet if government continues down its current path which is producing the opposite results promised and intended.

In order to avert a deeper recession, that is in a jobless recovery at best, government must stop creating new programs, must stop all but essential spending, must stop raising taxes, and it must do so now. My advice is to call, e-mail, or write your senators and congressmen, and say stop the spending. Tell them to start by defeating the trillion dollar health care plan, and the two trillion dollar Cap and Trade fraud. Neither is a real crisis, only one manufactured for political gain and power. Health care and climate change can be addressed after American families are back at work, and the economy is growing. Passage of these programs now is economic insanity.

Therefore if you ever wanted to buy a home, or sell a home, you had better do it soon while interest rates are at record lows, while prices are extremely affordable, while you have tax credits available, and while your dollar is still worth 60 cents.

Make this a great week from Fritz and Kristie Pfister and The Pfister Success Team of RE/MAX Professionals Springfield. Want to buy or sell a home while the opportunity is here? Call us at 652-7653, it would be an honor to serve you.

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