Fritz Pfister

People don’t need the media to constantly remind them that gas is at a record high price, they realize that every time they fill up. One can argue the reasons; a lack of refining capabilities, changeover to summer blends, refineries off line for maintenance just prior to prime driving season, oil industry price collusion, government intervention prohibiting drilling in Anwar, state, local, and federal gas taxes, and on and on. Doesn’t matter. The consumer is feeling the pinch at the pump.

The national housing market is already in a major correction coming off five consecutive years of record sales. The less disposable income, the less willing consumers are to make major purchases. Just ask Home Depot, or General Motors. All this while unemployment is near record lows, and interest rates are extremely affordable. Why have consumers stopped buying?

The Springfield Illinois housing market was humming along in April posting a 7% increase in home sales over April of 2006. Then the showing activity, and sales began to gradually slow just as the gas prices slowly began to rise. A coincidence? Maybe. Perhaps larger economic forces, such as satisfied demand, are the reason for the slowing of home sales. Through the first three weeks of May 2007, closed home sales are off 20% from May of 2006. It appears the gains made in April will be given back in May.

Gas prices have to be disconcerting news for home sellers. Local home sellers already face an inventory of unsold homes at record levels for this time of year, with over 1740 homes listed for sale with The Capital Area Association of Realtors (CAAR) MLS. Through April, only 1 in 3 home listings sold and closed. Those home sellers that live in the outlying areas around Springfield will feel the impact first, as home buyers become sensitive about driving distance to work.

Then to put a little sugar on top this week, the media announced that Ameren projects major price increases in the cost of electricity this summer. Just in time for air conditioner season. Many people view air conditioning as a necessity, but they could probably live without it. You have to have gas to drive to work, take the kids to school, go to the grocery, church, doctor, or wherever you go.

Just to make things even more rosy for home sellers, there is a complete lack of leadership from within the governors office to forge a state budget. It appears the governors threat of “my gross receipts tax or nothing” at the committee of the whole, is his leadership position. Rome burns while Nero fiddles.

State Senator Bill Brady stated “by just proposing the gross receipts tax, the governor has slowed the Illinois economy, at a time tax revenues were projected to increase by $800 million to the state this coming fiscal year.” Brady is right. There are numerous construction jobs on hold, business expansion plans on hold, and relocating businesses on hold until a budget is set, and the tax implications known. Do you think people working at these companies that have their business lives on hold, might be on hold themselves for any major purchases, such as a new home?

In light of gas prices, electric rate increases, bumbling ineffective state government, and business in a holding pattern, the local housing market is actually doing quite well. Regardless of the gouging by oil companies, electric companies, and the taxing threats of the governor. How long can this market sustain such attacks? Until all three culprits are taken to task? Hopefully.

Would the government, and business leaders with common sense, and integrity please step forward?