The Home Stretch and Hard Times Ahead for Home Builders
April 25th, 2010April 30th is the deadline to have a home under contract for first time and repeat homebuyers qualified to receive tax credits. They have to close before July 1 to qualify. Be careful on the streets this week as harried Realtors and buyers race around trying to find their next home.
The storm before the calm. With tax credits expired, and meager job opportunities to replenish the first time home buyer pool, sales will probably slow down. Two caveats. First there is so much momentum in the market it will likey carry over for a period of time. Second the threat of rising interest rates may spur fence sitters to action.
Should the market slow as predicted, the buyers left in the market will be in line for some pretty good home prices. The inventory is second highest on record for this time of year, 1710 listed for sale with Realtors as of April 24th, and the median sale price is down slightly already before any slowdown occurs.
If demand for homes weakens the segment of the housing market that will get hurt the most will be home builders. Not necessarily due to the lack of first time buyers starting the dominos falling up to new construction, but due to the government.
According to John Stites of Harasa Construction Inc., over 30 years in the business, this is bad news, because he says this is the toughest market he has experienced; ever. Including the high interest rate years of the 1980’s. Appearing on Let’s Talk Real Estate Saturday Stites laid out the bad news headed builders way due to government mandates.
Since Illinois accepted Stimulus money, Illinois builders are now required to meet new green mandated building standards. Stites said this will drive up the cost to build a 2000 square foot home by $15,000 to $20,000 dependant upon whether it is on a crawl space or a basement.
Alderman Frank Edwards appeared with Stites, and was the only alderman to vote aginst the new erosion control ordinance passed recently. This is another EPA mandate that is to be enforced by local government.
When digging a foundation the builders must enclose the area with a silt fence, and lay a gravel driveway to the construction site. Builders are now prohibited from piling, storing dirt within 25 feet of any property line. An EPA permit must be kept on site at all times or the builder is subject to fines.
Stites says builders won’t have enough room on a standard city lot, and will have to add the time and expense to haul the dirt to a storage area, and then have the dirt hauled back when ready to back fill around the foundation.
The cost for erosion control is in addition to the green building mandates which include but are not limited to; insulated basement walls with an R10 factor, sidewall R20 factor ( this can’t be achieved with 2X4 construction, will require 2X6), higher efficiency windows, doors, furnaces, air conditioners, and insulating all duct work in crawl spaces.
The construction industry already has a 27% unemployment rate, and new home construction is on the slowest pace since records started being kept 63 years ago. This in spite of SJR headlines in the business section stating a 47% jump in new starts in March. Stites says a 47% increase from nothing is not hard to accomplish.
Housing is key to all local, state, and national economies. To have leftist environmentalist unelected bureaucrats issuing these edicts is unconscionable during a time of depression within the housing industry. This will lead to higher unemployment. Great, people lose their jobs as the leftists continue their march to save the earth from the biggest fraud in human history; climate change.
Reality is beginning to set in for all of Obama’s ideological agenda policies. HHS reported this week that Obamacare will not reduce health care costs, costs will go up, along with insurance premiums going up. The budget gimmickry used to pass the bill is proving to be a fraud congressman Paul Ryan said it was before passage. The CBO can only score what is placed in front of them. The results are going to be closer to The Heritage Foundation’s estimate on costs, and the loss of 1.6 million jobs.
The Stimulus has blown a nearly trillion dollar hole in the budget, while 4 million people lost jobs since its passage. States are running out of the temporary funds, but the mandates included for states that accepted stimulus funds won’t go away. Same for Obamacare mandates, and $563 billion in new taxes.
The unsustainable debt continues to build as Obama keeps his ideological blinders on following failed socialist John Maynard Keynes Keynesian theory that government spending creates jobs. Looks like Heritage’s PHD’s in economics were correct, this will fail to create jobs. For every dollar the government spends is a dollar taken from the private sector (who are the job creators), that will be unavailable to add jobs.
My hope is that more Americans wake up to the radical policies that are destroying the economy, killing jobs, and hurting families. Massive tax increases, and the threat of hyper inflation will be the final nail in the capitalist free market economy’s coffin. Something the progressive statists have sought for a century. The power for big government redistributing wealth within the economy.
Come this November if Americans can tune away from Dancing with the Stars, and American Idol long enough to pay attention; will be their last opportunity to save the American idea. Individual rights, states rights, limited federal government, and a capitalist economy providing opportunity for all.
To stop this leftist freight train the House of Representatives, the Senate, or both must be taken away from the Democratic Party that has been taken over by the most radical far left elements of the party. Failure to do so will lead to America becoming a second rate European style socialist country. High unemployment, lower standards of living, entitlements de’jour, loss of rights, perputual debt, onerous taxation, and government dictating your everyday actions will become the norm.
Personally I reject Obama and his progressive agenda. I pray to God that the majority of Americans agree with me, and take that stand in the voting booth this November. Our American way of life literally depends upon it.
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.
