Fresh off the heals of a record tying 945 home sales in the fourth quarter of 2009, the first quarter of 2010 feels sluggish. Probably because it is. With a backdrop of tax incentives and record low interest rates home sales the first two months have exceeded the first two months of 2009 by a whopping 25 sales.

If you need a reminder things weren’t real peachy in the economy to start 2009. You could say consumers were nervous. Asking most consumers to spend money was like asking a claustrophobic to become a spelunker. As a result the 648 home sales were the fewest since 2001. Through the first two months of 2010 we’re up to the second fewest home sales since 2001. Special.

The height of the market in Springfield was during the years 2003 through 2007. In order to measure what kind of progress the market is making it would be better to compare the five year average during the good times to where we stand today.

Believe me I am happy home sales are up over last year, because that sure beats the alternative, however the realist in me wants to know more. January came in 16% below the five year average, and February 12.7% below. Sales pending heading into March were up by only 15 or by 4.4%. Looks like that will seal the deal for the second slowest first quarter for home sales since 2001.

How can this be with the government paying first time home buyers up to $8,000 to buy a home, and qualified repeat home buyers $6,500, while interest rates have defied the laws of economics remaining at record lows?

Jobs, and confidence. Both are nonexistent in large measure.

What will it take to get the economy in gear? In my humble opinion by getting government out of the way. The following comes from The Heritage Foundation’s The Morning Bell titled; So How’s That Pivot to Jobs Going? There will be a test to see if you can identify the common theme. Here goes:

• At one of President Obama’s many jobs summits, Fred Lampropoulos told The New York Times that businesses were uncertain about investment because “there’s such an aggressive legislative agenda that businesspeople don’t really know what they ought to do.” That uncertainty, he added, “is really what’s holding back the jobs.” 
• Dan DiMicco, CEO of steelmaker Nucor Corp,  told the Wall Street Journal: “Companies large and small are saying, ‘I am not going to do anything until these things — health care, climate legislation — go away or are resolved.’” 
• Porta-King CEO Steve Schulte told USA Today his company is not investing because “proposals in Congress to tackle climate change and overhaul health care would raise costs.” 
• The New York Post’s Charles Gasparino reported on the 600 companies stock analyst Peter Sidoti covers: “‘There hasn’t been one bankruptcy,’ he tells me. How did they survive the recession? By cutting costs and hoarding cash, not expanding their business and hiring more people, even as the economy now is starting to recover. During other recoveries, Sidoti says, firms like these would be hiring workers in droves as demand picks up for goods and services. This time around, they’re not — because ‘they don’t know what their costs are going to be.’” 
• National Federation of Independent Business chief economist Bill Dunkelberg writes: “The horizon is filled with cost unknowns, from healthcare to cap and trade to yawning deficits and the need to come to grips with them, from paid family and medical leave to card check, from expiration of the Bush tax cuts to state decisions about their finances. Washington cannot expect small business owners, facing difficult economic circumstances anyway, to commit themselves to investing in new employees or equipment and vehicles without acknowledging and revealing the policy-inspired costs that will be imposed on them. It is all about uncertainty and confidence.”

Now, can you tell the common theme from these experts as to why there are no jobs being created? Government. More specific the Obama administration’s social/economic policy agenda. It’s killing the economy. Pure and simple. These transformative proposals with costs that could bankrupt America, and eliminate millions more jobs are not the solution for economic growth.

As long as the progressives in the White House and congress continue to push these agendas we will continue to suffer a jobless recovery. Sad because this economy is ready to explode with growth. Just as with Obama’s tiny electric cars, his utter lack of understanding free market capitalism (or maybe he does), won’t provide the engine for growth. The economy will remain in reverse, or neutral at best unless policies change.

Defeating the proposed health care bill, cap and trade bill, card check bill, and extending the Bush tax cuts would provide the power for the engine of job creation; small business.

With these current economic circumstances spring to local agents in 2010 will be like a Christmas when you wanted the new bicycle and you recieved a sweater. You’ll get something, just not what you wanted.

This presents quite a challenge for home sellers. If demand is weak due to a lack of jobs and confidence, and the market runs at below normal, then selling a home (especially after the tax incentives expire April 30th, and interest rates go up as Bernanke predicts) will become quite the challenge.

Don’t get me wrong, there’s going to be over 3000 winners in the home selling sweepstakes this year. Whether a home seller wins the sweepstakes or not, will be determined by how and who they choose to sell their home. (FYI: Free home seller seminar March 18, 6:00 pm at The Hilton Garden Inn on Dirksen Parkway. fritz@springfieldhome.com for reservations.)

Not to worry. My team will continue to sell homes. There’s bills to pay, and nuts to store.

Maybe next spring more presents will be found under agent’s trees in Springfield Illinois.

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.

Here is the first sentence of my weekly observations from last week; “Ought oh. During the State of the Union Address on January 27 President Obama told America he was pivoting from health care reform to making jobs his number one priority.”

Now here is the title from The Heritage Foundation’s Morning Bell Article published yesterday; ”So, How’s That Pivot to Jobs Going?” Seems the Heritage Foundation and I are on the same page. I recommend you become a member of The Heritage Foundation for in depth analysis on the economy, government programs, national security, and issues of the day. The Morning Bell article supports what I have been warning against the past ten months. Here’s one paragraph from the article:

• National Federation of Independent Business chief economist Bill Dunkelberg writes: “The horizon is filled with cost unknowns, from health care to cap and trade to yawning deficits and the need to come to grips with them, from paid family and medical leave to card check, from expiration of the Bush tax cuts to state decisions about their finances. Washington cannot expect small business owners, facing difficult economic circumstances anyway, to commit themselves to investing in new employees or equipment and vehicles without acknowledging and revealing the policy-inspired costs that will be imposed on them. It is all about uncertainty and confidence.”

This was one of five supporting points of view from various industry leaders. If jobs are key to the housing market across the nation and here in Springfield, the federal government needs to change direction. Unfortunately it doesn’t appear the Obama Administration is listening. Yesterday from The Foundry at The Heritage Foundation article “Long-term Unemployment Still Too High” comes this message;

The stock market reacted favorably this morning when it was announced that the number of people on payrolls fell by 36,000 in February, better than the 50,000 loss expected by economists. The unemployment rate held steady at 9.7%, also slightly better than expected.

Another indicator that may have received less attention is the 15-Week unemployment rate—the percent of the labor force that has been unemployed for 15 weeks or longer and is still looking for employment. In December, 2007 this statistic stood at only 1.6%. In February, 2010, it was 363% higher at 5.8%. This, after three “stimulus” bills during the time frame is proof that the idea that we can “spend our way out of recession” is for the birds. In fact, after rising the astronomical 363%, the rolls of those unemployed 15 weeks or more has only declined by 147,000 since it peaked in November of 2009 at 8 million 976 thousand people looking for work.

Folks this is the reality in America today. Confidence by business is too weak to begin hiring until health care, and cap and trade are resolved. The heavy costs that will be placed upon businesses for these transformative programs is too great to consider hiring until their fate is known. If either healthcare or cap and trade, or both passes then businesses can budget for the future. Passage of these bills means more job losses, defeat of these bills means jobs growth. For now uncertainty reigns.

Another great reference in support of my positions on job creation was published in the Business News March 3 edition of the SJR. Richard Judd is National City Distinguished Professor Emeritus at The University of Illinois Springfield. Judd’s article “Get serious about job creation” spells out clearly what I reported here last week; that the jobs bill in consideration in congress today “will not make a dent in our massive unemployment”.  Actually I said it is like taking a squirt gun to a 6 alarm fire. Judd lays out the actions necessary to create jobs, and it is all about small businesses being the engine for job growth.

The Obama Stimulus bill not only failed to create the 3.5 million jobs as predicted, 3.4 million jobs have been lost since passage. As Charles Krauthammer said; the only thing the Stimulus bill accomplished was to put a trillion dollar hole in our budget. In my opinion this is due to the Stimulus bill containing nothing for small businesses.

As Professor Judd and The Heritage Foundation fellows explain, there will be no significant job growth unless small businesses begin to hire. With the current policies that’s not going to happen, and the jobless recovery will be extended. In fact the threatened taxes contained in health care, cap and trade, combined with the expiration of the Bush tax cuts threaten the very existence of many small businesses. It is simply unaffordable and could cause the loss of an additional 1.6 million jobs according to Heritage studies.

Back to the Springfield February 2010 home sales report. For the ninth consecutive month brokers have reported a year over year monthly increase in home sales. The 218 closed home sales were up 10.1% from 198 last year. For the first time in 9 months the median sale price declined by 1.26% to $97,500 from last February’s $98,750. Sales pending combined with pending continue to show was up by 4.4% to 357 from 342 last February. A paltry increase of only 15 sales pending.

Some will pronounce the increase in home sales as good news, I’m not so sure. To me it is comparable to Harry Reid saying; good news only 36,000 people lost jobs in February. I’m fairly confident that wasn’t good news for 36,000 families.

Considering a backdrop of tax credits and record low interest rates, and expectations the first four months of 2010 to be the most active of the year with tax credits expiring April 30th, the 218 home sales were second lowest since 2001 exceeding only last year. Same trend as January. The second slowest market since 2001 year to date. Anemic I would say in light of the incentives. Probably the result of spent demand from the original tax credit last year leading to record fourth quarter home sales.

If now to April 30th in fact turns out to be the most active of the year, it will be a long year for home sellers. One good reason if you are considering selling a home to register for my free home seller seminar on March 18. Call 391-1811 or e-mail fritz@springfieldhome.com to make your reservation. The seminar begins at 6:00 pm at The Hilton Garden Inn on Dirksen Parkway. It may mean the difference between success and failure. A small investment of your time could provide big dividends in your home sale effort.

Make this a great week from Fritz & Kristie Pfister and The Pfister Success Team Inc. at RE/MAX Professionals Springfield. It would would be an honor to serve your family. We have immediate openings for home listings. Call us at 652-sold (7653) when you want to sell your home.

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.

Democrats used the old liberal playbook citing examples of all the sad stories due to evil insurance companies, such as the woman who used her dead sister’s dentures. I’m not real sure that moved the debate toward any tangible solution, other than the Democrats pleading for government takeover, and oversight of the best health care system in the world.

The Republicans stated their free market solutions, and pointed out the budget gimmickry, smoke, and mirrors used in the Obamacare plan. They clearly showed Americans the distinct ideological difference between the two opposing plans.

Democrats believe big government is the solution, Republicans believe people should be free to make their own health care decisions within a free market system without government intervention, and taxation.

The most clearly stated argument against the Senate/Obama plan was presented by Congressman Paul Ryan. Ryan left Obama speechless because it is impossible to dispute the indisputable.

You can go to Heritage.org, where they have posted; Video: Paul Ryan Destroys Obamacare’s Deficit Reduction Claims.

Or there is the excellent analysis at Investors.com IBD Editorial; Rebuttals To Ryan? We’re Still Waiting. Below are the bullet points that Ryan quoted at the summit, compliments of the Investors.com article:

• “This bill does not control costs (or) reduce deficits. Instead, (it) adds a new health care entitlement when we have no idea how to pay for the entitlements we already have.”

• “The bill has 10 years of tax increases, about half a trillion dollars, with 10 years of Medicare cuts, about half a trillion dollars, to pay for six years of spending. The true 10-year cost (is) $2.3 trillion.”

• “The bill takes $52 billion in higher Social Security tax revenues and counts them as offsets. But that’s really reserved for Social Security. So either we’re double-counting them or we don’t intend on paying those Social Security benefits.”

• “The bill takes $72 billion from the CLASS Act (long-term care insurance) benefit premiums and claims them as offsets.”

• “The bill treats Medicare like a piggy bank, (raiding) half a trillion dollars not to shore up Medicare solvency, but to spend on this new government program.”

• “The chief actuary of Medicare (says) as much as 20% of Medicare providers will either go out of business or have to stop seeing Medicare beneficiaries.”

• “Millions of seniors who have chosen Medicare Advantage (Medicare through a private insurer) will lose the coverage that they now enjoy.”

• “When you strip out the double-counting and … gimmicks, the full 10-year cost of the bill has a $460 billion deficit. The second 10-year cost of this bill has a $1.4 trillion deficit.”

• “The ‘doc fix’ (restoring cuts in Medicare reimbursements) costs $371 billion … a price tag (that) made the score look bad. (So) that provision was taken out, and (put) in stand-alone legislation. But ignoring these costs does not remove them from the backs of taxpayers. Hiding spending does not reduce spending.”

• “Are we bending the cost curve down or are we bending the cost curve up? If you look at your own chief actuary at Medicare, we’re bending it up. He’s claiming that we’re going up $222 billion, adding more to the unsustainable fiscal situation we have.”

I would say Ryan went prepared, exposed the fraudulent numbers in the bill, manipulated by Obama and the Democrats to deceive the public into supporting this government takeover that would alter the relationship between the American citizen and government forever.

Are you prepared to live in a United States of America where a ruling elite and their bureaucracies make your health care decisions for you? This is no small matter. Are you willing to sacrifice your liberty which will result in America becoming no more than a second rate European Socialist Democracy? Are you willing to accept the accompanying norm of 15% unemployment?

The Obamacare plan is a sham, it will not accomplish what Obama and the Democrats claim. An honest reform plan would stand on its own. There would be no need for smoke, mirrors, and gimmickry. The producers of such believe the American people as stupid and incapable of self governance.

A tsunami may have missed Hawaii yesterday, but the electoral tsunami will not miss Hawaii’s favorite son and progressive supporters holding office today, come this November.

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.

What has the president and the congress done since that speech? After a quick campaign stint around the country by the president and vice president touting on the anniversary of the passage of the Stimulus bill, how well it worked, they returned to Washington to focus on health care.

The house had already passed a quote “jobs” bill that was labeled Stimulus II at an estimated cost of $157 billion dollars. This week the senate passed their jobs bill, a slimmed down version at a cost of $35 billion. Included was an incentive for businesses to hire with the government waiving social security withholding for the first year on all new hires that were on unemployment, and a $1000 bonus if the business kept that employee for one year.

That’s like taking a squirt gun to a six alarm fire. We have about a $12 trillion economy of which $35 billion is about three one thousands of a percent. That would be like a seller who hasn’t received any offers attempting to stimulate activity by lowering their asking price from $150,000 to $149,999.99. In other words the senate is applying window dressing to a severe wound, while adding another $35 billion to our debt. Does this make sense to you?

If jobs are key to the housing market then the news this week was down right ugly. Experts were shocked when first time claims for unemployment jumped to 496,000 following the unexpected jump to 473,000 the previous week. This is not good news as experts were hopeful the jobs market was correcting itself with earlier trends. Economists say during a healthy jobs market new claims for unemployment run around 350,000 a week. It doesn’t appear the president’s rosy claims that the Stimulus worked jive with the reality of these unemployment numbers.

On a brighter note the government said fourth quarter growth was better than the 5.7% reported and was adjusted up to 5.9%. Most economists say the increased production is due to businesses restocking inventory, and felt it doubtful that pace of growth could be sustained, and that the rate of economic growth would be determined by consumer spending.

If that’s the case the news about consumer confidence this week doesn’t bode well. After confidence jumped to a scalding revised 56.5 reading in January, (FYI a reading of 90 means solid economic footing, a reading over 100 means economic growth), experts expected a slight decrease in February to 55. Viola! Consumer confidence fell nearly 11 points to 46 for the second lowest level of consumer confidence since 1974.

Seems my blog on January 31 “Springfield Illinois Housing Market, Home of Resiliency” was prescient when I stated; “With all the proposed actions of government, federal and state, it is miraculous the confidence index surpasses 50.” I am beginning to doubt the U of I Economics Applications Laboratory prediction that Springfield confidence may rise to 70 in 2010.

In other bad news which was down right ugly, it was reported that new home sales dropped by 11.2% in January to the lowest level on record, but don’t worry folks they’ve only tracked these numbers for 50 years. As with most articles you have to read the whole story, as with the one in the SJR in this past Thursday’s Business section with the bad news headlines, revealed in the last paragraph that new home sales increased in the Midwest by 2.1%. With snow in the 49 continental states, I’m sure weather had an impact upon these dismal numbers.

The parade of bad economic news continued yesterday when it was reported that existing home sales fell across the nation to the lowest levels in 8 months. Down a little over 7%. Together with new home sales a very disappointing result when you consider this happening when interest rates are near record lows, and there are tax incentives to buy a home.

Then the parade of bad news continued in today’s SJR Business section with the headlines; Economic recovery likely slowing. A short quote just to give you a flavor of the AP article; “The economy continues to grow, but it won’t feel like much of a recovery this year amid high unemployment, record high foreclosures, and tight credit.” Any questions?

Yes, my question; if government spending creates jobs, why no jobs? The government has spent trillions of dollars keeping interest rates low, pumping cash into the money supply, bailing out banks, buying car companies, and in stimulus spending. Why no jobs? Because Keynesian theory the president puts his full faith into, does not work. It is a liberals myth, otherwise we would have more jobs than people to fill them. All we have to show for the most profligate spending in our history, including the Great Depression, is a debt that will enslave future generations.

Oh well, back to the bad news, following the health care summit between Democrats and Republicans moderated by President Obama, all indications point to the Democrats forcing the health care reform bill through without any bipartisan support, and against the will of the American people. This is bad news. The proposal contains $500 billion in new taxes that falls primarily upon the backs of small businesses, and will cost $2.5 trillion dollars adding to already unsustainable debt. 

Small businesses have been reluctant to hire because they are frozen in fear with the taxes they are being threatened with by not only the federal government, but also local, and state government. Don’t look for any significant job creation as a result, especially in Illinois.

If the health care reform is passed taxing small businesses, and the state passes an income tax increase, then regrettably, the U of I Economics Applications Laboratory may be low on their forecast that Illinois will lose another 100,000 to 200,000 jobs this year. If the fate of the housing market will be determined by jobs, you can draw the conclusion.

Ninety percent of the government’s actions have hurt the economy more than helped the economy. From Bush’s TARP, to Obama’s Stimulus, Health Care Reform, proposed tax increases, and Cap and Trade the free market capitalism of the United States in under attack, and by our own government. As long as our leaders believe government is the solution and not the workers, small business owners, and entrepreneurs in the economy, be prepared for a freight train of bad news to continue.

OMG Pfister are you full of Doomsday today? No, not full, there is GOOD news to report for Springfield! Recall this statement I made in my resiliency blog on January 31;

“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 tendency to perform the opposite of the nation. That’s not always true, however more so than not.”

January home sales tank across the nation, in Springfield home sales were up, the median sale price was up, and the inventory at the lowest levels since 2005. See good news for Springfield compared to the nation. See there was a sliver of good news this week. At least for now. Although we are performing better than the nation, we still are running below normal levels of activity for this time of year.

Make this a great week from Fritz and Kristie Pfister and The Pfister Success Team Inc. of RE/MAX Professionals Springfield. Due to the success of our marketing systems we have immediate openings for 13 residential listings. If you or someone you know needs to sell their home call us at 217-652-7653.

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.

From the SJR February 17, headline; Gasoline prices hit another low for 2010. February 20 headline; Two-week rise puts oil prices near $80.

February 17 headline; Economic signs boost stocks. February 19 headline; Report: Job market improvement may be slowing.

February 19 headline; Fed bumps up rate banks pay for loans. February 20 headline; Low inflation rate gives Fed room to keep rates down.

February 17 headline; Homeowners farther behind on payments. February 20 headline; Fewer homeowners falling behind. (Sub-headline; End of pain in housing bust a long way off).

Are you clear on foreclosure, price of gas, interest rates, unemployment, and the economy now?

All week long President Obama and Joe Biden have traveled the country campaigning on the stimulus worked platform, while it was reported filing for first time claims for unemployment benefits rose (gasp) unexpectedly last week by 31,000 to a seasonally adjusted 473,000. That stimulus sure is working! Keep campaigning fellas! You make Tiger look sincere.

While the economy continues to shed jobs, what is the solution being proposed? Groundhog day 2009 continued into 2010, health care reform. While a group of 20 select Democrats are nearing finalization of reconciling the senate and house bills, that has been roundly rejected by the American people, the Obama administration presses forward. Forget Massachusetts, New Jersey, Virginia, town halls, tea parties, polls, and the will of the American people?

Republicans make reform proposals which are killed in committee never seeing the light of day, somewhat like the health insurance lobbyists, and big pharma meetings with Obama in the White House, only to be called the party of no. Obstructionists are these politicians to what the American people don’t want.

A great read on the inside dealings of the Obama administration is “Obamanomics” by  Timothy P. Carney. If liberals would read this book they would be jolted from their mesmerized groundhog slumber, and would start to believe the presidents real name is Barack Ryan Blagojevich.

Health care reform is a trillion dollar bill according to the CBO, paid for with tax increases on job creators, and cuts in Medicare. In reality it is a 2.5 trillion dollar bill according to The Heritage Foundation, and will cost another 1.6 million jobs.

For what reason?  A bill that accomplishes nothing Obama, Reid, Pelosi say it will. Lower costs, improved care, and 30 million more insured all for less money? According to our own Aaron Shock more people (7%) believe Elvis is alive, than the people (6%) who believe the stimulus worked. I guess that’s why Obama believes he can sell the notion we can save money by spending money.

Just perfect timing to go further in debt. Mr. Michael Boskin a professor of economics at Stanford University and a senior fellow at the Hoover Institution wrote an article titled; “When Deficits Become Dangerous.”

Quoting the last paragraph of the article;

Former Senate Majority Leader Howard Baker famously called Reaganomics—with its defense buildup, tax cuts and budget deficits—a “riverboat gamble.” (Which, by the way, worked out well.) Mr. Obama’s fiscal strategy is more akin to the voyage of the Titanic. Let’s hope he changes course soon enough to prevent disaster.

To read the article that provides evidence to arrive at such a conclusion, follow this link: http://www.hoover.org/pubaffairs/dailyreport/archive/84216767.html

In the final analysis the Obama health care plan isn’t about health care, it’s about a big government agenda with the ultimate goal; the takeover of the health care industry to make every American dependent upon government. The progressive dream come true.

If Republicans attend this progressive-fest on February 25th, I fearlessly predict the results; Groundhog Day.  If Obama and the Democrats win on this issue, the American idea, and people lose, at least temporarily.

If Reid, as reported by the AP, is prepared to use reconciliation in the senate to bypass a filibuster by Republicans, and forces a health care bill down the throats of Americans that they do not want, election day November 2010 will make the Saint Valentine’s Day massacre look like an episode of Mr. Rogers Neighborhood. Groundhog Day 1994 style.

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.

Then sales pending began to slip in November with a decline of 2.72%, December with a decline of 3.71%, and January with a perplexing 27% decline. A drop that was unexpected with the tax credit extended, expanded, and continuing record low interest rates. Entering the final week of February closed sales are up by 29.16%. How can home listings going under contract in January be down 27%, and closed sales the following month be up 29% when it only takes about a month to close out a sale pending?

In my world 2 plus 2 still equals 4. So how can you close more home sales than went under contract? Then it dawned upon me that The Capital Area Association of Realtors changed the rules in the MLS and added a category titled sale pending continue to show back in August of 2009, which are not counted in the sale pending category.

Here’s a peek at the inside business practices of Realtors. In January 200 sales pending were reported, down 27% from 274 reported in 2009. However there was no sale pending continue to show classification in January of 2009. In January 2010 there were 60 sales pending continue to show reported. Add those to sales pending and you have 260 down by only 14 from the 274 in 2009, or by only 5.1%. This makes it more realistic that closed sales could be up in February. Seems like a lot of those sale pending continue to show are actually closing.

Why did the Association of Realtors add this category “sale pending continue to show”? The argument was that when a seller accepted a sale contingency the listing was marked as sold pending contingency and not as still available for sale on the internet. That this was confusing to consumers.

A second reason given was that when a seller accepted an offer from a buyer concerned about whether their sale would close or not, had their listing removed from the public view on the internet.

Agents were screaming that in either case of a sale contingent offer, or a troubled offer, the agent and their seller wanted the listing to remain on the internet for public view to allow showings for firm offers and for back up offers. Sounds fair enough, however I have some points to share with you regarding these sellers and agents actions.

First a seller that accepts a sale contingency offer, one that can only close if the buyer’s home sells, should now understand that these are risky offers to enter into. That the number of showings will be affected for them when agents with buyers that don’t need to sell skip over their listing.

Secondly a seller that would accept an offer so shaky that they want to continue to show the home for a solid offer is also accepting a risky offer. The majority of agents don’t show listings marked pending continue to show. Just canceled a showing I had scheduled for today when the listing hit the hot sheet as sale pending continue to show as an example. A preapproved buyer has just been eliminated as a possibility for this home seller.

Accepting a sale contingency has always been inadvisable in my professional opinion. Either the buyer is a buyer or they are a seller if they can’t or don’t want to buy before they sell. This will only eliminate a number of potential qualified buyers from seeing the home, and they won’t be sold until the buyer has sold their home. Why take that risk?

This new category, sale pending continue to show, however is ripe for abuse by the agents. Does the seller really understand the risk they are taking if it is a shaky offer? If the financing of the buyer is questionable why accept the offer before the buyer gets their issues resolved? If the seller is concerned about the home inspection, why didn’t the seller have the home inspected before they listed, or ask the buyer to have an inspection before committing to a contract?

The question I have is for these agents. Did you explain thoroughly the possible consequences and risk involved by accepting one of these types offers to your client? In my humble opinion, that conversation may not be taking place.

The real reason to place a listing into the “sale pending, continue to show” category is the agent wants the listing to continue to be visible on the Internet so that when a prospective buyer inquires about the home, they can tell them the listing is sold pending but there are other homes I can show you. In other words the agents have the potential to abuse this new category to their benefit, and not necessarily the benefit of their client.

Thanks to this new category it will be a little more challenging to predict the number of future closings. But that is not the issue. The issue is that agents will have the opportunity to abuse the system to their benefit and not the consumers. To me, that’s a problem.

Regardless, it appears February is headed for more closings than last February. That’s really good news because last February was in the tank while we were in the midst of the financial crisis. It wouldn’t be a good sign for the local housing market if sales fell below a bad month. There were only 198 closed home sales last February when we normally average around 250. Even if we surpass last February’s home sales, we’ll still be below normal.

The inside story this week is that although we have hundreds of wonderful real estate professionals serving this community, their ethics vary. There will always be those that are commission driven first. That’s why I believe there is a high number of sales pending continue to show on the books. There appears to be a number of agents taking advantage of the new system in order to try and give themselves an advantage over fellow Realtors, while the consumer is an unwitting accomplice.

The greatest sin in the real estate profession is usually not the act of commission, rather the act of omission. Reminds me of what a sage old Realtor told me when starting in the business back in 1987, God did not create all Realtors equal.

Make this a great week from Fritz and Kristie Pfister and The Pfister Success Team Inc. of RE/MAX Professionals Springfield. It would be an honor to serve your family, call us at 652-7653.

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.

Less stimulus from the Fed would be a good thing. The $1.3 trillion that Bernanke pumped into the bond market has to come from somewhere. If he just printed the money monetizing the debt, that leads to inflation. If he borrowed money to borrow money, that would be paid back in taxes with interest.

Less stimulus would be a good thing elsewhere too. As in president Obama’s stimulus plan. The now over $800 billion boondoggle slush fund has accomplished one major thing, oppressive debt for our children and grandchildren. The be all, end all Keynesian theory that government spending can create jobs proves to be an objective failure. Without any evidence of any jobs being created, Obama claims the unprovable, 2 million jobs were saved.

If spending money by the government creates jobs, the tripling of the largest annual deficit in history to $1.4 trillion dollars in Obama’s first year, we would have jobs raining from the skies. Now Obama wants to increase the deficit in year two to $1.8 trillion. At the current trajectory the interest payments will approach $1 trillion by 2019. If interest rates remain low. Yes stopping any further stimulus, whether you call it a jobs bill or not, would be good for the economy.

The economic illiteracy of this administration continued this week when economic adviser Larry Summers said on Fox Business News; “the White House plan to tax entrepreneurs and small businesses was economically smart.” Huh? Aren’t those the people that create jobs?

Then through executive order, after failing to pass in congress, president Obama is forming a deficit reduction panel. When asked if Obama would support tax increases he said; “I will remain agnostic toward their conclusions.”

Translation; all you folks that voted for the promise that taxes would not be raised on anyone earning less than $250,000 a year are about to see the lie that the rich can pay for all this profligate spending. You’re going to have to help. It was worse than they thought, the budget Obama wrote is Bushes fault. Just as Scott Brown’s election was Bushes fault.

If Obama’s budget is passed he will have amassed more debt through deficit spending than all presidents before him combined. Quite an accomplishment in less than two years. You could confiscate 100% of every dollar earned by those earning over $250,000 a year and never dent this man made Armageddon.

Bernanke; “rates will go higher this year.” The $1.3 trillion bond buy down will end this March. Interest rates on mortgages to car loans will be determined by the open bond market. Due to the precarious finances of the U.S. government, Moody’s is talking about the United State’s credit rating falling below AAA. Bet that will attract a lot of buyers to the bond auctions.

Nobody knows how this will play out, however it can’t be good. Increases in interest rates depresses consumer spending, weakens purchasing power for home buyers driving home prices down, and could have catastrophic implications when debt collectors like China come calling. Is it possible the currency will be inflated to pay this unsustainable debt? Soothsayer economist Rubino says the dollar will fall at least 20% in value. That buck in your pocket is now worth 80 cents.

Little snap shots of what is occurring in the economy that morphs into the big picture from the headline; “Bernanke predicts less stimulus, higher rates.”

Less stimulus is good, higher rates are not. Happy Valentines Day from the Obama administration’s economic policy geniuses. Larry, Moe, and Curly must not have been available. Instead we get Larry (Summers), Roe (Romer), and Squirrelly (Geithner).

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.

Due to the financial collapse the the government passed a first time home buyer tax credit within the stimulus bill to spark home sales amid a depressed housing market being dragged down by record numbers of foreclosures. How effective was the program? Seems paying people to buy a home worked as home sales jumped, and to a record level locally in the fourth quarter.

The local market was down over 10% through the first five months of 2009, when the tax credit caught the attention of home buyers that resulted in eight straight months of increased year over year home sales. On November 6 the government announced they were extending the first time buyer tax credit, and expanding the credit to include repeat home buyers. These credits state that qualifying buyers must have a home under contract by April 30, and closed before July 1st.

Back in September and October prospective home buyers had no indication the tax credit would be extended, and rushed to the market to get their $8,000 from Uncle Sam before the deadline of November 30th. This robbed a lot of future demand with sales pending falling in November, December, January, and through the first two weeks of February, although activity has picked up substantially the past two weeks.

The up to $8,000 first time buyer tax credit, and the $6,500 repeat buyer tax credits sound like a good reason to jump in the market now so you don’t miss the April 30th deadline. However that is not the main reason you should jump into the market now if you want to buy a home.

Here’s the reason. On Thursday the headlines of the SJR Business section said all you need to know; “Bernanke predicts less stimulus, higher rates.” More about the stimulus part in a minute, the important part is, higher rates.

As part of the governments plan to spur economic activity the Federal Reserve under Bernanke implemented a $1.3 trillion bond buy down program to keep interest rates low on consumer loans for credit cards, car loans, and mortgage rates. That’s all coming to an end this March.

That means the bonds being sold that determine interest rates will be whatever the market will bear. Investors will want a higher rate of return than  what the Fed accepted, which will drive up mortgage interest rates. By how much? We’ll have to wait and see.

The one thing I remember from past years is that when interest rates start fluctuating, they go up faster than they go down. Back in the 1990’s it wasn’t unusual to see 2% swings within a day. Nobody knows what’s going to happen with rates, but here’s the dollars and cents impact upon borrowers. A $100,000 mortgage amortized over 30 years at 5%, 6%, and 7% have monthly principal and interest payments respectively of; $536.82, $599.55, and $665.30.

A one percent increase in interest rates from 5% to 6% means you will pay $62.73 more a month, $752.76 more a year, or $5,269.32 more if you stay in the home the average of 7 years. If rates go up to 7% from 5% you will pay $128.48 more a month, $1541.76 more a year, and $10,792.32 more over 7 years. I’d say that gives you thousands of reasons why you’re better off buying now than later in the year. Tax credits aside.

This should be of special concern for home sellers. When interest rates go up, the buying power of buyers goes down along with home prices. However that’s not all home sellers need to be concerned about. The artificial market created by tax credits causing demand now will weaken demand later.

A major concern is the number of home buyers that will remain in the market after April 30th is due to the economy. Springfield’s unemployment rate is at the highest in decades, and the city is estimating about 95 layoffs are impending if the city can’t work out a suitable arrangement with unions. Regardless the outcome, it’s not going to be good for anyone involved. Need we say anything about the state’s jobs picture?

At the federal level President Obama wants another stimulus plan he is calling a jobs bill. The first stimulus plan was predicted to create 3.5 million jobs by the end of this year. The stimulus has failed to create any jobs, however the president claims 2 million jobs have been saved. Sorry that’s not the same as creating millions of jobs. Well over 3 million jobs have been lost since the stimulus passed. A resounding failure by any objective measure.

Now the new stimulus called a jobs bill, has hit a snag. House speaker Pelosi passed a $150 billion bill in December full of more spending. The senate didn’t agree and passed a bipartisan bill out of committee for around $85 billion. Senate leader Harry Reid then pared that bill down to $15 billion. The touted jobs bill that was to be passed with urgency is now in trouble. In other words we can’t expect anything positive from congress in the immediate future that will help the private sector create jobs.

And that doesn’t matter anyway if the congress and the president continue to believe more spending, placing future generations in hock, is the answer to creating jobs. It didn’t work the first time, why should we believe it would work this time?

The administration says the stimulus plan brought us back from the precipice, and has stabilized the economy. Maybe so, but that’s not what they said the big risk borrowing would do. They now predict the economy will add 95,000 jobs a month for the remainder of the year. That is so pathetically weak it doesn’t even match the birth rate. The jobs outlook for the year isn’t shaping up to look very good.

What’s the solution? Make it easier for the private sector to create jobs, and you do that with tax cuts so businesses have more operating revenue to hire, and people have more income to spend on goods and services instead of taxes and government debt.

The bottom line is that if I’m a home buyer, I’m getting into the market pronto so I don’t have to pay thousands more later due to rising interest rates, and to get that free government money from the tax credit.

If I’m a home seller the hair on my neck would be standing up. I know if my house is not sold by April 30th when the tax credit expires, and interest rates go up combined with weaker demand due to rising unemployment, then selling my home just became significantly more challenging.

Not to worry, anybody can work under ideal conditions, but not everybody can work under unfavorable conditions. That’s why we’re here, and why we’ve been here for Springfield folks since 1987. This isn’t our first rodeo. If you want to buy or sell a home in these uncertain, and unpredictable times, give us a call at 652-sold. In fact we have immediate openings for 8 home listings. We have pre-approved buyers working with us to find them a home. Call us or e-mail us, it would be an honor to be of service.

Make this a great week from Fritz and Kristie Pfister and The Pfister Success Team Inc. of RE/MAX Professionals Springfield.

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.

Everyone who objectively looks at the nation understands that the economy is stabilizing, with unemployment down to 9.7% in spite of employers cutting another 20,000 jobs in January. Did you know that when President Obama took office he pledged to create 3.5 million jobs with his economic policies, including a massive stimulus plan? The chart below from The Heritage Foundation displays how successful Obama’s policies have worked:

Here’s what Heritage Foundation fellow Brian Reidl says of the Obama budget:

• Permanently expand the federal government by nearly 3 percent of gross domestic product (GDP) over 2007 pre-recession levels; 
• Raise taxes on all Americans by more than $2 trillion over the next decade (counting health care reform and cap and trade); 
• Raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade; 
• Leave permanent deficits that top $1 trillion in as late as 2020; and 
• Double the publicly held national debt to over $18 trillion.

OK, I think everyone realizes the mess at the federal level, and nothing in the budget is encouraging to business that will create jobs. Tax increase anyone?

What about the Illinois economy? In Sunday’s business section of the SJR Tim Landis wrote this:  

There was not a lot of cheerfulness coming out of the economics department at the UNIVERSITY OF ILLINOIS last week.An index of the Illinois economy compiled each month by J. Fred Giertz was flat in January, or as the report put it, “the state is still tightly in the grip of recession.”Geoffrey Hewings weighed in with his own forecast, which suggested “Illinois is mired in a deep employment recession that could linger for years unless the state unravels the roots of its nearly decade-long job slump.”

Hewings said the state’s leaders must act quickly to determine long-term employment needs and decide how to train the work force to meet demands. “Is the problem with education, labor skills or the markets they serve, or is it about corporate taxes or the dismal state of the Illinois economy?” said Hewings.

Now ”The Rest Of The (Illinois) Story” which was not reported in the SJR:

Where have all the jobs gone? Dr. Hewings calls the cycle IL is in the “lost decade.” Remember the lost decade Japan was referred to-we are facing that right now in Illinois. No job/economic growth…As we know job growth/job creation/job stability is directly tied to the housing market recovery.

Since the early 1990s, IL growth rate has fallen behind the US and the rest for the Midwest. Current employment in Illinois matches that for April 1997. Through October 2009, Illinois has added jobs at 40% US rate since 1990. Illinois has only experienced three years since 1980 when employment growth rate exceeded the United States and all were before 1990. Even if Illinois’ economy turns around in 2010, it would still take a minimum of 8 years to reclaim 2000 unemployment levels.

Business expansion and investment are critical to improve the job situation and the overall economy. IL has dropped from 4th to 15th in terms of per capita income in the last 15 years. University of IL Regional Economics Applications Laboratory suggests loss of 100-200,000 more jobs in the state over the next 12 months-absent impacts of stimulus and other initiatives. Dr. Hewings forecasts IL will maintain an 11.6% unemployment rate in 2010. IL spends a Gross State Product in excess of $600 billion yet spends virtually nothing on economic research on the economy. In an economy that is not growing jobs or business expansion, fewer people will be changing jobs. People are voting with their feet in Illinois-net migration in IL drains $1.6 billion from the state’s economy each year. Out-migrants enjoy higher per capita income than in-migrants.

This erosion has continued for more than 10 years and contributed to the decline in state’s position in the U. S. Unless the fiscal crisis is addressed in Illinois, there is little prospect that growth rates will match those for the United States,” according to Dr. Hewings.

In the first decade of 2000, the housing market led the economy directly through sales, transactions and construction. Now, the housing market is responding to the economy. END Dr. Hewings.

Hopefully the rest of the story puts into perspective the dire situation in Illinois. The tax increases in the Obama budget will only exacerbate the recession in Illinois. Raising taxes by the state causing more families and business to leave Illinois is not the solution. We need someone who will run the state like a business, force the government to take its medicine (spending cuts), and make Illinois attractive to business once again.

As Winston Churchill said; “A country trying to tax (and spend) their way to prosperity, is like a man standing inside a bucket trying to lift himself up by the handle.”

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.

Closed home sales of 167 were up 3.08% from 162. The median sale price of $104,500 was up 13.03% from $92,450. New listings of 353 were down 9.25% from 389. Average days on the market of 92 were down 4.17% from 96. Sales pending of 200 were down 27% from 274.

The reason my prediction for closed sales was off for January was due to estimating 20 to 25 closed sales would be reported this week from end of month closings. There were only 7 reported from the 585 agents with member brokers in the MIS.

The number that stands out in January is the homes going under contract at 200 down 27%. It looks as if we are trying to replenish demand following the record fourth quarter. Action did pick up significantly the first week of February, just in time for this winter storm to probably slow us down this weekend.

There was a mixed bag of news regarding the economy this week. Unemployment for January fell to 9.7% in spite of losing another 20,000 jobs. On the surface that doesn’t seem logical. The reason is the large number of people that had their benefits expire and are no longer counted. Regrettably when counting the under employed with those who have quit looking the rate jumps to over 16%.

In a bit of surprising news the Bureau of Labor Statistics announced adjustments to the number of unemployed in 2009. They only missed the mark by 1.2 million. The number of people who have lost their jobs since the beginning of the recession in December of 2007 is now estimated at 8.4 million instead of 7.2 million. That’s quite an adjustment, wonder if anyone loses their job on this one? I’m sure they would in the private sector.

In other news President Obama released his 2010 budget proposal. Here are a few highlights as reported by Heritage Foundation Fellow Brian Riedl; 1. Permanently expand the federal government by nearly 3% of GDP over 2007 pre-recession levels; 2. Raises taxes on all Americans by more than $2 trillion over the next decade (counting health care reform & cap and trade); 3. Raises taxes for 3.2 million small businesses and upper income taxpayers by an average of $300,000 over the next decade; 4. Leaves permanent deficits that top $1 trillion in as late as 2020 and; 5. Doubles the publicly held national debt to over $18 trillion.

I’m not able to translate what all that means, but it gives me a sick feeling in my stomach. Most people can figure out this is not good for the country, their or their children’s future. Here’s an excerpt from the Heritage Foundation reporting on the budget proposal; QUOTE:

“Representative Paul Ryan tells National Review online: ” This budget presents a choice of two futures…This budget is about more than specific programs or policies. It is really about the American idea, and whether we want to move towards a European-style welfare state.” Or as then California Governor Ronald Reagan put it in a slightly different context over 40 years ago: “This is the issue of this election: Whether we believe in our capacity for self government or whether we abandon the American revolution and confess that a little intellectual elite in a far off capitol can plan our lives for us better than we can plan them ourselves.” END QUOTE.

Personally I think it rather presumptuous of President Obama to include Health Care Reform, and Cap and Trade in a budget when neither has passed into law, and the American people have flatly rejected both in recent polling. Perhaps he misses the meaning of Massachusetts, New Jersey, and Virginia.

Regardless, in my opinion there can be no significant recovery, no meaningful job creation if this budget is passed. You simply cannot burden the job creators in the private sector with onerous taxation, and regulation and expect them to start hiring. Just two reasons why President Obama’s proposals to help small business with loans and tax credits will fail to have the intended impact.

Curtis Dubay Sr. Tax Policy Analyst with the Heritage foundation has posted an in depth analysis at Heritage.org titled; Hiring Tax Credit Will Not Create Long Term Jobs. It is an excellent, and easy read which I recommend. My intuition tells me why the tax credit will fail, Mr. Dubay provides the evidence, and proposed solutions that will create long term jobs.

The state of the housing market, economy, and for that matter the union will be determined by what actions congress takes on this radical budget proposal. If it is passed as requested, the $1.8 trillion debt created combined with last years $1.4 trillion deficit will mean the Obama administration will have imposed more debt upon the American people than was created in all the prior years of our nations existence combined. This is a reckless and dangerous course of action, and should be stopped, or we and our children will suffer the consequences.

For your future well being, and that of the nation, contact your representatives to voice your disapproval. Unless of course you approve of this radical agenda.

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.