Springfield Illinois Housing Market, Home of Resiliency
January 31st, 2010Last week The Capital Area Association of Realtors released the official numbers for 2009. There was much joy as a four year slide in the number of home sales was stopped as 2009 bested 2008 by 6.5% with 3716 home sales. Throw in a 4.8% increase to a new record high $109,000 median sale price, and it appears the local housing market is in great shape going forward.
Then there’s the pain in the neck people around like me to point out the reality of those numbers. Sure Springfield performed better than the state who experienced a 1.5% decline in sales, and a 14.6% decline in the median sale price. Springfield also bested the nation that saw home sales increase 4.9%, but had the median sale price fall 11.9%. Hooray for Springfield!
Now the pain in the neck part, yes a four year slide was stopped, however the number of homes sold beat out only 2008 going back to 2002. Headed in the right direction most would say. Not so fast there buckaroo, sales pending fell modestly in November by 2.72%, and in December by 3.77%. Then in January sales pending were down 25.47% heading into the final weekend. Maybe the direction has changed?
A record tying fourth quarter consumed a lot of home buyers as they rushed to beat the tax credit deadline. The impact upon demand is obvious when you consider the January slide in sales pending is compared to last January which was down from the previous year. So much for the extended tax credits, and the record low interest rates spurring demand over the winter in Springfield.
Which direction the Springfield housing market takes in 2010, up or down, will be determined by jobs and consumer confidence. Wow what a pain in the neck reminder when the city’s unemployment rate is up to 8.4% in December from 6.2% a year ago. Never mind the city is forcing union employees to take furlough days, and a reduced previously agreed upon pay raise (this will do wonders for consumer spending), or face scores of layoffs (which will do even more for consumer spending).
It wasn’t very comforting this week when President Obama gave his State of the Union address. Yes he pivoted and said jobs would now be his number one priority. This after 4 million folks lost their jobs in 2009. The solution according to Obama? We didn’t spend enough, and proposed another stimulus after the first massive $800 billion slush fund failed to create any jobs. Great let’s try something again that is a proven failure.
Another proposal is to provide a tax incentive for businesses to hire people. Small businesses aren’t hiring because they are frozen with fear from all your threats to their incomes Mr. President. $400 billion in taxes for your health care takeover, which the president continues to press forward, Cap and Trade legislation which will amount to the largest stealth tax in history, crippling industry, and ultimately forcing more job losses.
No the businesses that will benefit from a tax credit to hire someone will be large corporations, who would have been hiring anyway. Just to rub the salt in that wound, those corporations will probably now delay hiring to see what taxpayer money will be thrown their way.
Then to every one’s relief the president continued his populist attack on banks. Obama said here’s something everyone agrees upon from the left, right, and in the middle, we all hated the bank bail out. Really? Then why did you vote for it as a senator? The result of attacking the banks, and taxing the banks, will mean fewer or more expensive loans for small businesses, leading to even more job losses. Great plan, increase the unemployment rate to bring up tanking poll numbers.
There’s more that the president proposed, however the aforementioned should provide enough evidence that nothing the Obama administration is planning to do will help in the jobs arena. No wonder economists predict unemployment to continue to rise, and the Congressional Budget Office is forecasting unemployment to remain above ten percent through 2011. Along with foreclosures.
Need we say anything about what the state of Illinois is doing regarding job growth? Better not, it will interrupt their discussions on which way to raise taxes so more businesses and people will leave the state. Illinois has joined New York, California, Michigan, and New Jersey with the distinction as leaders in out-migration of people. Estimates range between 730,000 and 780,000 skee-daddled out of Illinois this decade. Great, fewer taxpayers to raise taxes upon! We’ll find out from the class of people with the greatest number of jobs increase; census takers.
Since jobs will be a drag on the housing market, that brings us to consumer confidence. The main stream media was giddy when they reported the increase in the consumer confidence index for December. Most didn’t report the actual numbers, just reported consumers were much more confident in December. Really? The index rose to a scalding 55.9%. It takes an index of 90 to be on solid economic footing.
With all the proposed actions of government, federal and state, it is miraculous the confidence index surpasses 50. After all, the government continually attacks capitalism, the job creators of the private sector, (note: government doesn’t create jobs) by proposing bills that will punish success if you do expand or take risks. It’s hard to imagine why small business owners haven’t responded positively to these proposals.
You are not to be concerned if you are a homeowner in Springfield, Illinois. The extended, expanded tax credit that expires April 30 will flush out any remaining home buyers from their winter hideouts. This while interest rates remain at historic lows.
That reminds me, why isn’t anyone talking about the 800 pound gorilla in the room? Inflation? Oh, never mind the trillions of dollars pumped into the economy without any increase in goods or services, and the trillions borrowed that will be paid back with interest. The CBO estimates our interest payment in 2019 will be larger than the entire federal budget from any year in the 1990’s. Who are Obama’s advisers?
Don’t worry because now in my third decade as a full time Realtor, Springfield always proves its resiliency, and performs better than anyone ever predicts. Springfield has a tendancy to perform the opposite of the nation. That’s not always true, however more so than not.
So there you have it, the Springfield Illinois housing market will be just fine in 2010. When the economic policies of the Obama administration take the national housing market down, we’ll go up. Besides, I’m counting on a new governor that will actually live in Springfield, and move the thousands of jobs back to town that Blagojevich moved to Chicago. We’re going to need the additional staff to write all the unemployment checks.
Springfield Illinois, home of resiliency.
The opinions expressed here are solely those of Fritz Pfister, or identified sources, and not those of RE/MAX Professionals Springfield, or RE/MAX International.
