Fritz Pfister

The Springfield Illinois housing market proves again to be bucking the national trends. According to sales reported by member brokers to the Capital Area Association of Realtors (CAAR) MLS, July 2007 finished with 381 closed home sales. Although only up slightly from 378 in 2006. Through July CAAR has reported 2446 closed home sales which is slightly below the past two years, however above the five year average for this time of year.

The very affordable Springfield market is not only holding steady on prices, the $103,700 median sale price through July is the highest on record. This reverses a trend from 2006 which saw the first decline in the median sale price since 1994. The median price of a home in the Springfield market increased from $67,700 in 1992, to $89,900 in 2002. In 2005 the median price finished at $100,000 for the first time in history, before falling back to $99,000 in 2006. Today’s median price of $103,700 is up $4200 (+4.2%) over 2006 through July.

Due to the fact that the local real estate market is performing above national, and most state markets, CAAR has called for a press conference Thursday August 9Th at the association’s office to share the news with the public. Regrettably consumers are once again being misled by local media when the local paper, radio, and television stations report only on the troubled national market. The association is hoping to avoid the negative impact the media played in last years downturn in the local market. Although the local MLS was on record pace for home sales through October of 2006, the incessant pounding of negative news into the consumers minds, was partially responsible for the fall off in sales the last months of the year.

The local home seller is not without challenges. The inventory of unsold homes remains at record levels. The 1871 listed for sale today is up 6% over last year at this time. The inventory is up 40% above the average number of homes for sale at this time of year in the 2002-2004 sellers market.

With interest rates holding at historically low levels, unemployment at 4.6%, and the availability of mortgage funds, the main obstacle to the housing market is the state government.

A budget impasse was created by the socialistic governor Blagojevich, and continues today due to the governor’s insistence upon universal health care, massive increases in education spending, and his proposed capital projects.

The universal health care proposal of ‘Illinois Covered’ is a noble cause doomed to failure as all other bureaucratically run welfare systems. Blagojevich wants to fund this behemoth by adding a 3% payroll tax to any small business with 10 or more employees that doesn’t currently pay for health insurance. The cost would be thousands of Illinois jobs, and an inferior system to the already inferior system in place.

If anyone says they are not for increased education funding they are labeled as anti-children. The 1.5 billion dollars that Blagojevich is wanting is not necessary, however the teachers unions would tell you differently. The problem with education funding in Illinois is the system of paying for education, which has caused serious financial inequities between school districts. No one has any concrete proposal(s) on how to pay for any increase in education spending, let alone provided evidence warranting a 1.5 billion dollar increase.

The capital project is too a noble cause following the tragedy of the bridge collapse in Minnesota. The problem was created by Blagojevich when during the preceding four years, he diverted money allocated for capital improvements to the general fund for pet projects (eg: tens of millions for stem cell research). Now infrastructure in the state is at critical mass. The money allocated to simply maintain the highway system with 1000 miles of overlay annually, was diverted to the general fund, forcing IDOT to reduce overlays to 400 miles a year. Once again no one from either side of the aisle can come up with a reasonable solution on how to pay for any capital projects.

The housing market and the overall economy has been cast over by a pall with the budget impasse, and impending government shutdown, caused by Blagojevich’s threat that he will veto any budget that doesn’t contain all three of his government largess proposals; fiscal bankrupting proposals. The unintended consequence, as with all social experiments. The state has the fourth largest economy in the union, ranks 48Th in job creation, the highest business fees (taxes), crumbling infrastructure needed to support commerce, and is now labeled as the worst state in the country to do business; all resulting from Blagojevich administration policy to date. What will be the result of implementing his latest proposals? Hopefully the legislature(s) can form a super majority that can override a veto, however only if they can muster the courage to pass a budget that is within the means of the state.

That is the only hope for a rejuvenated economy, and housing market(s) throughout the state.

All this occurring while state employees, pension recipients, contractors, et al don’t know if they’ll have a job or paycheck on the day after tomorrow, joining medicaid and hundreds of vendors going unpaid since the expiration of the temorary budget on July 31St. On August the 8Th comptroller Dan Hynes will no longer have the authority to pay any of the state’s bills.

On August 9, I corrected this blog, changing the first paragraph. June sales in the CAAR MLS in fact finished behind June of 2006. Closed home sales were down by 9 in 2007 from June of 2006, or by 1.9% I apologize for stating June sales had increased.