Fritz Pfister

You probably would be hard pressed to find a more stable real estate market than Springfield, Illinois which is served by the Capital Area Association of Realtors (CAAR). The association serves all or parts of six central Illinois counties. Springfield is home to the Abraham Lincoln presidential library and museum. The area contains some of the most productive farm land in the world, and agriculture plays a major role in the downstate economy. Welcome to the heartland.

During the recent correction in the housing market across the nation, which has experienced double digit losses in the number of homes sold, and declining median sales prices, Springfield remains stable. That is until now.

The member brokers of CAAR reported 12 consecutive years of increasing home sales, 1994 through 2005. That ended in 2006 when member brokers fell 29 closed home sales shy of tying the all time record. Year to date, CAAR reports the second highest number of homes sold on record, only off by 4% from last years record.

The median sale price of a home in Springfield is up 2.8% year to date to a whopping $104,900, from $102,000 at this time last year. The previous record for an entire year was set in 2005 with a median sale price of $100,000. Do you think this is an affordable housing market? The median price declined only once the past 13 years, and that was in 2006, falling precipitously by 1% to $99,000 in 2006!

The vicious cycle begins with the election of Blagojevich as governor. Blagojevich makes no qualms about being a staunch liberal endorsing issues such as stem cell research, and universal health care as examples. When the state legislature voted down funding for stem cell research, Blagojevich funded the program through executive order with $10 million. When the legislature voted against the largest tax increase in state history, a 7.8 billion dollar gross receipts tax to fund universal health care, Blagojevich line item vetoed $473,000,000 within the budget, and then announced he would fund through executive order the first step for universal health care, with the $473,000,000 he vetoed. Circumventing the democratic process, with the tacit approval of Emil Jones Senate president. Jones refuses to allow a vote to override any Blagojevich veto. Jones is a puppet, and in the pocket of the governor, regardless the harm to the people, or the economy.

That is just the latest smoke and mirrors act by the governor. Blagojevich vowed during his campaigns to never raise the sales or income taxes, because that would impact working families the most. Instead he has raised hundreds of fees on the people for government services, and on virtually every business in the state. I guess Blagojevich doesn’t think working people purchase license plates or drivers licenses, as an example of how he clandestinely taxes the working family. We documented here that fees raised on trucking companies have cost the state over 25,000 jobs as trucking companies ran for the exit.

Job growth in the state has slowed to a crawl due to the anti-business policies of the governor. The Department of Employment Security reported this week that 47,000 new jobs were created the past year in Illinois. Sounds good, however ranks Illinois 48Th in the nation in job growth. With the governor imposing universal health care unilaterally, and robbing other programs through executive order to pay for the program, a near bankrupt state is closer to the precipice. And businesses aren’t knocking down the door to relocate to Illinois?

There you have it, the beginning of a vicious cycle. The state government as the worst enemy of the economy, the business and private sectors, and the people. The nanny state liberal psychosis will cause more harm than good for those it is intended to help. Kids Care which was meant to insure all children, only has 54,000 kids enrolled, and half are illegal immigrants. Blagojevich refuses to release the names of doctors, and patients participating in this ’savior’ of a program, claiming patient confidentiality. Interesting, all the neighboring states make that information available. Already a clear example of why the government shouldn’t be in the health care business, pure bureaucratic ineptitude at ridiculously high cost to the tax payer.

In order to have a healthy housing market, there must be job growth that provides buyers for the housing market. Otherwise you are just trading places, which is common feedback following many showings on my listings; “they love the home, but they need to sell theirs first”.

To help facilitate the vicious cycle is a willing media. The media thrives upon, and apparently rejoices in reporting bad news. They began contributing to the vicious cycle by incessantly reporting upon everything negative within the national housing market in 2006. It took the media ten months of negative reporting on the national market before having the desired results within the local housing market; a sudden slowdown. The local media were willing accomplices by ignoring and not reporting the good news in the local market.

Along comes 2007 as sales of homes nationally continue to fall, median prices spiral downward, and up jumps the sub-prime mortgage debacle. The media was giddy with bad news to over-report. Once again the local media plays the role, as NONE of those issues; sub-prime loans, high foreclosure rates, falling sales or prices, were applicable to the local housing market. The local media failed to report the reality about the local market. The result is a gloomy minded consumer sitting on the sidelines and not entering the housing market. Once again at a time when they should be entering the market. In my 21 years as a Realtor, there has never been another time when there were record numbers of homes for sale, large numbers of motivated sellers, and interest rates at near historical lows, as today.

The sub-prime problem quickly became political as tens of thousands of those purported poor victims were supposedly tricked by unscrupulous lenders into signing loans they could not afford. It must be the governments responsibility to save these poor victims from their own actions, as congress votes next week on a mortgage bailout. With the support of other nanny state liberals like Illinois senators Durbin, and Obama. I would urge them to vote NO. Whatever happened to personal responsibility in this country? Democrats act, behave, and vote as if the people are too dumb to know what’s good for them.

Just think, what Blagojevich has done to Illinois to ruin a thriving economy, with his liberal agenda, appears to be on the way to the White House in the form of Hillary Clinton. Free services for all, in exchange for your votes. Worked for Blagojevich, and will probably work for Clinton too. Who will be able to pay for their cradle to grave ‘free’ entitlements when the economy collapses due to oppressive taxation, or when the inevitable happens as a result of their historically inept defense policies? The media is a willing accomplice in these endeavors too. Just as the media soured the minds of consumers about the housing market by incessantly reporting the negative, the media loves a victim. They will promote through faux reporting, the liberal agenda, which will ultimately bankrupt the nation. There are no ‘free’ services, someone ultimately must pay, and it won’t be the politicians, or the media owners.

The vicious cycle has finally taken effect in even the most stable of real estate markets. The state government places roadblocks to the economy, the governor attempts to tax jobs out of the state, and the media poisons the minds of consumers by not telling the local story, at least with the frequency of the national story. What it took the media ten months to accomplish in 2006, only took eight months in 2007. The first three weeks of September were unusually slow, barring the reporting of end of month closings Friday the 28Th, closed home sales were down 22%, the median sale price down over 15%, in a historically stable market.

Home sellers should call and thank their governor, and legislators for stifling the economy. And don’t forget to call and thank the local media for ignoring the good news in the local market in favor of trumpeting the bad news from the national market, souring the mood of consumers who could have, and should have bought your home.

The vicious cycle. Bad economic policy implemented by the government, supported by an agenda driven media. Round and round it goes. Home sellers and builders be prepared for a bumpy 3+ years that Blagojevich remains governor. God only knows what liberal lunacy will come following a Democrat winning the presidency. You only need look to Illinois to see the mess liberal policy can create.

(This paragraph added 10-03-07 5:10am) September 2007 compared to September 2006 residential sales as reported by member brokers of CAAR. Closed home sales down 18.1%. Median sale price down 8.79%. Sales pending closing down 9.3%. January 1 through September 30, 2007. Closed home sales down 4.7%. Median sale price up 2.8%. Sales pending closing up 6.6%. On a side note: there were 401 more sales pending closing that failed to close YTD than in 2006. See previous post to learn why.