Weekly Observation for April 28, 2012: Rare Springfield Sighting of Normalcy
April 28th, 2012Cautious optimism is the word of the day. There are signs that the Springfield housing market is behaving more like ‘normal’. What are the indicators? Running opposite the national trends.
Closed home sales and prices in March were down, locally up. The only disconcerting category is sales pending, which were up in March nationally and locally. Not wishing any bad luck on our fellow citizens but opposite would have been better. That’s why only cautiously optimistic.
There are other reasons as well. Primarily the large increase in the number of home listings going under contract have yet to appear in the closed column. The gap is getting better, however here’s the reason for my concern; entering the year we had 224 listings under contract, since January 1 we’ve added 1491, up 18.9% over 2011, for a total of 1745 listings classified as under contract this year. Through the end of business yesterday 864 had closed.
Of the 580 classified sold pending, the most dating back to this date in 2005, have 24% or 122 that are classified pending continue to show. This typically indicates the buyers are not slam dunks for closing and sellers want their homes available for showings and back up offers. Those are as rare as a Cubs World Series championship. We’ll just have to monitor the closings to see how many actually close. Are they delayed, or are they failing contracts?
Another sign that’s good for Springfield but not the nation are economic reports from the week. Springfield had it’s unemployment rate fall to 7.4% from 7.8% last March, has a number of commercial projects proposed and planned that will help the construction industry. Holding our own you might say.
The opposite is true for the nation which had bad economic news this week. The GDP first quarter estimate was 2.2% when 3% is needed to create enough jobs to meet demand of new entrants into the jobs market, let alone decrease unemployment.
Weekly claims for unemployment were up again this past week to 388,000, but more disconcerting was the four week moving average exceeded 375,000 for the first time in a couple months. This is a clear sign hiring is slowing.
The one bright spot in the economy the past three years has been manufacturing which fell 4.2% to the lowest level since January of 2009. This is probably the reason for higher rates of unemployment claims. Britain officially entered a double dip recession and the Eurozone is teetering on widespread recession. This is important because Europe purchases anywhere from 19% to 25% of our exports.
The national housing news wasn’t much better. Existing home sales fell over 6% in March, new home sales fell 7% to a rate of 323,000 when 750,000 is considered healthy and down from the peak of 1.3 million. S&P/Case-Shiller reported home prices fell again in February and are now down 35% from the peak.
Although consumer sentiment was up slightly, consumer confidence fell to 69.2. A reading of 90 represents a healthy economy a reading of 100 a growing economy. The Gallup measure of confidence is at a four year high, however all remain at unhealthy levels.
Consumer spending is reported to be up, however the methodology for the advanced figure is laughable, a sampling by snail mail of 5,000 businesses, when real time spending could be retrieved form VISA or MasterCard. My concern is wages are not going up in correlation to spending which could mean people are acting like government, spending more than they’re taking in. That always leads to problems down the road.
The good news was sales pending were up along with building permits in March. The problem is those building permits were up on multi-family and apartments not single family homes.
Good news locally is that sales pending have been up every month along with the median sale price which stands at $112,000 today up by 11.72% from this time last year. Please remember we are comparing to a year when we actually had a winter. It appears, especially on the national front that the mild winter simply stole demand from the spring skewing early year reports.
The number of homes going under contract this past week were the best since April 2010 when buyers were rushing to qualify for tax credits. We have now exceeded 100 sales pending five of the preceding six weeks which is what we would normally expect this time of year.
This is getting scary, a normal market. I’ll continue to be cautiously optimistic, however tempered by the knowledge, that you can only receive here, that although the sales pending are way up, the closed sales are still running below the five year average. The 864 closed as of yesterday compare to 1236 on this date in 2007, off by 30%.
We may be headed back to normal, but nowhere near the highs. We’ll have to chalk up the great run we had from 2003 through 2007 as the good old days. Just like my fishing vacations, the guide always says, you shoulda been here last week.
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.
