Fritz Pfister

Back to reality following last weeks good news about the biggest month over month increase in home sales on record this past November. The influence upon sales created by the first time home buyers tax credit mixed with record low interest rates proved potent.

The concern is that the tax credit would negatively impact future sales as families moved up their agenda to buy a home. Why not? An $8,000 gift from the U.S. taxpayer is hard to turn down.

Then the government announced the extension of the first time buyer tax credit, and extended a tax credit to qualified repeat home buyers. Why? The housing market is a major component to economic recovery.

Let’s take a quick glance at market activity since the new tax credit was announced. Home listings going under contract are down 6.62% to 296 from 317. Doesn’t sound like much of a decline, and it’s not, except when you consider sales pending are down compared to a bad year.

What could cause this slower pace of sales? While discussing this with fellow agents and consumers this week, many said it’s always slower this time of year. Well duh, but why is it slower than last year when the economy was gripped with fear, and uncertainty during the economic meltdown?

Could it be interest rates? Absolutely not. Mortgage rates have held below 5%.

In my opinion there are several factors involved. First is satisfied demand resulting from the rush by people to beat the November 30th deadline. The second factor is the level of demand declines when unemployment goes up. The final factor is consumer confidence, and the changing spending habits of consumers.

Let’s face it folks, families are rebuilding following significant losses over the past year to their savings, and retirement accounts. Many are on a mission to eliminate debt. Many are still concerned about their jobs during what is being called a jobless recovery.

People are being cautious with their spending as it was reported this week that Americans net worth increased 5% last quarter, however remains 21% below pre-recession levels. Many are rebuilding their nest eggs in the rising stock market, but that’s not most working folks. The working family is eliminating debt.

Consumer spending jumped 1.3% in November which is good news. The devils in the details though as higher gasoline prices made up the majority of that spending. I’m confident black Friday sales made up most of the balance.

So it’s back to reality, the local housing market appears to be taking a break for the holidays as sales pending have slowed down. The question is, how many home buyers remain in the market, and how many will enter the market?

Hopefully this is the calm before the storm of activity after the New Year! But will that happen?

My crystal ball is in the shop but I do know consumer confidence will impact consumer spending. With an over 2000 page health care bill grinding its way through the senate, people and businesses, at least the 61% who oppose this bill, wait to see what the costs will be. The CBO estimates the minimum cost of this bill will add $290 billion to annual deficits, there will be 108 new bureaucracies, and 13 tax hikes.

It seems to me that it’s not helpful when trying to boost consumer confidence so people will begin spending again, to create this much uncertainty. People are scraping to rebuild then bam, along comes mandatory insurance and higher taxes setting them back.

The latest confidence builder brought to you by your spend happy government is legislation to raise the debt ceiling by $1.8 trillion dollars to $14 trillion. In other words our debt to others will be higher than the total annual GDP of the entire nation. Take every penny from every worker, retiree, and business in the country for one year and you couldn’t pay the principal let alone the interest.

Call me as a skeptic, but the current administration keeps telling us the more they spend the better off we’ll be. The administration said the $787 billion Stimulus plan would keep unemployment from reaching 8%, and without immediate passage unemployment could rise to 8.9%. Congress passed the bill without reading it, and viola unemployment climbed over 10%. That worked out great.

Now following the jobs conference it has been determined that we simply didn’t spend enough, and the president wants to spend another $200 billion tax dollars we don’t have. This time on temporary ‘green’ cash for caulkers jobs, and infrastructure. Weren’t we told the $787 billion was for shovel ready infrastructure?  Does any of this make sense to you?

Man’s greatest fear is fear of the unknown. With consumer confidence below 50%, why does the government want to create even more uncertainty with massive health care bills that will drive up costs, cap and trade that will drive up costs, and then announce they need to spend more? This seems a tad bit irresponsible during a recession, actually quite insane if your goal is economic growth.

Oh well what do I know, I’m just a working stiff trying to get by like you are. The good news is we are all in this together, and I believe without question the American people have enough common sense to reject these insane economic policies. It will be us, the American people that will save the economy, not the government. Government doesn’t produce anything, people do.

 Just ask us, we live in Springfield, the one in Illinois.

Make this a great week from Fritz and Kristie Pfister and The Pfister Success Team Inc. of RE/MAX Professionals Springfield. When you want or need to sell a home in uncertain times call a service that is certain. Over 80% of our listings sell on average every year, 30% more than the market average.Call us at 652-7653, it would be an honor to serve you. Merry Christmas to all.

The opinions expressed here are solely those of Fritz Pfister, or identified sources,  and not those of RE/MAX Professionals Springfield, or RE/MAX International.