Changes Within The Springfield Real Estate Market
December 5th, 2010One barely noticeable change in the local real estate market is the real time reporting in blogs like this compared to old media like the newspaper that has the economic indicators for October published today, December 5. Yesterday on Let’s Talk Real Estate contained in my ‘Weekly Observations’ was the preliminary report on home sales for November.
In fairness to the SJR they don’t receive the ‘official’ reports from the association’s of Realtors until weeks after they have been published here on SpringfieldHome.com. I’m not the official spokesperson for the Realtors, however as a member of the association I am quoting from the very same source of the ‘official’ report.
The end of the tax credit to home buyers five months removed is another change underway. There were two rounds of government micromanaging of the real estate market through the Stimulus bill, one that had an initial end date on November 30, 2009 which was extended and expanded for buyers to have a home under contract by April 30, 2010 that had to be closed by June 30, 2010, for the buyers to qualify for the government’s charity with your tax dollars.
Did the tax credit provide any meaningful and positive impact for the local housing market? The publicity for the credits were the most powerful impact because it focused consumer attention upon home ownership. Did the tax credit cause more people to buy homes who normally would not have made a purchase? Maybe a few, but not enough to move the meter.
The influence of the tax credit’s impact was to simply move the timing of those purchases. For example last November was a record setter for home sales because the government dallied until November 7 before announcing the extension. People couldn’t risk losing the extra ‘free’ government money so they had to get a home under contract in October to meet the November 30 deadline.
That’s the reason October sales pending of 275 were down 39.69% from 456 in October of 2009. As a result closed sales in November 2010 of 229 are down 36.91% from 363 in November of 2009. However the change this November of importance are the 288 sales pending heading into December because they are only off by 2 from the five year November average of 290 sales pending. A return to normal hopefully.
This is a welcome change following three turbulent years in the local housing market that included the first significant decline in home sales in 2008 to 3488 sales due to the financial meltdown in the fall of 2007, and following five years of nearly 4000 or more sales.
There were high hopes for an economic recovery this year and for a continued climb in the number of home sales. That was not to be the case, as I predicted in my December 27, 2009 post. Due to tax credits buyers merely moved up their purchase dates to the first half of year where sales skyrocketed up 15.7% over the first half of 2009, only to fall like a rock in the second half because of satisfied, and weak demand.
Second half home sales falling as much as they have during a time interest rates hovered around 4% on 30 year mortgages was the result of the abject failure of federal economic policies. No jobs were being created. The sharp left turn that the Obama administration, Pelosi house, and Reid senate took froze businesses with uncertainty.
The Bush Tax Cuts expiring on December 31, and not being addressed before the election only extended the uncertainty for businesses. More importantly were major pieces of legislation, Obamacare and FinReg contributing greatly to the lack of jobs. Financial guru Larry Kudlow sums it up nicely, quote:
Large and small companies remain worried about the high regulatory and tax costs of Obamacare, which is the number-one jobs-stopper. How expensive will it be over the next five to ten years for the new hire? Companies also have to deal with a crazy quilt of new financial regulations that may block access to new bank loans when private credit demand kicks up. [end quote]
Going forward with these overly expensive and intrusive behemoths providing uncertainty for all businesses large and small, there’s little hope of any significant job creation that could replenish the demand for homes. Adding insult to injury, both are counter-productive, and will fail to improve health care or provide meaningful financial reform.
The best course of action would be to repeal both programs, however that will not happen as long as the party of wealth redistribution controls the white house and the senate. It will be up to the Republicans to throw roadblocks into the implementation process until new leadership that believes in free market economies can get the boot of government off the brake of job and economic growth through repeal.
That means the next two years are going to be unpredictable. The entrepreneurs, small, and large businesses are ready to explode in growth. There’s $1.5 trillion sitting on the sidelines in banks and businesses that won’t be invested until there is certainty. The Bush Tax Cuts being extended and not becoming the Obama Tax increases will fuel some new hiring. However the economy will never realize a full throttle ahead until Obamacare and FinReg costs are known, or they are repealed. Known costs will lead to modest expansion, repeal to full recovery.
That’s why as a real estate professional, at a time when interest rates are creeping up, yet are still in historically low ranges, with fewer home listings selling due to the weak demand, one must change their approach to getting homes sold.
Sure the basics still apply. There are still only three reasons why a home sells; price, condition, and marketing. The home seller is responsible for the price and condition, I can only make recommendations, however the marketing is in my control.
That’s why there will be little noticeable change within the Springfield real estate market, except for the changes made individually by agents. The most successful agents at getting homes sold will be making changes to their marketing, mostly noticeable to their clients, but not to the market as a whole.
My team has been blessed to finish among the top of all agents the preceding 13 years in the number of listings that sold, helping more sellers to get sold than anyone during 7 of those years, and the most closed listings overall during that entire time frame.
Why? Because we keep doing the same things over and over again? Only the important things like sharing our extensive market knowledge on price, and preparation, but changing our marketing systems to evolve with the new technological times. Implementing several changes during the second half of this year allowed us to increase our production over the previous year at a time the market was flat or sinking.
The one thing that will not change in the local housing market will be my predictions for the market in 2011 which will be posted here on December 28. You can see my predictions for 2010 on my December 27, 2009 posting. Didn’t miss the mark by much, however conditions last year made it much easier to predict. This year is a whole different story. If you have a crystal ball, please call me before December 28. Thanks.
The opinions expressed here are solely those of Fritz Pfister or identified sources, and not necessarily those of RE/MAX Professionals of Springfield or RE/MAX International.
