Weekly Observation for September 18, 2010 Heading into the Fall Housing Market
September 18th, 2010Summer is winding down and fall is headed our way next week. For the housing market this will be a summer to remember. Poised to be the slowest third quarter for home sales on record. A summer local Realtors will be glad to see end.
With nine business days remaining in September we have had the predicted bump in activity this September. Closed home sales have improved to being down only 17.42%, and sales pending are only running behind by 12.61% nearly half the decrease in August. Headed the right way, however there will be no catching up in 2010 compared to 2009.
The reason is last year at this time the market had picked up demand due to the first, first time home buyer tax credit. Realtors were getting the word out that the November 30th deadline to close was rapidly approaching. Consumers responded and demand picked up.
Across the nation consumers had already reacted to the government giveaway and that news was reflected in an August 2, 2009 SJR Business section headline; “Worst could be over for housing market” with a sub headline Economists expect industry has hit bottom. So much for those economists!
Be prepared, the third quarter numbers will be down right ugly for the Springfield area housing market. Last year local Realtors closed 1122 home sales in the third quarter. With nine business days remaining in this year’s third quarter 609 have closed, 513 fewer down by 45%. Sales pending of 1316 in the thrid quarter of 2009 compare to 882 so far this year down by 434 or by a 33%. Headed in the right direction but painfully slow just like unemployment.
Unemployment remains persistently high while the Bureau of Labor Statistics reporting 450,000 claims for initial unemployment were filed last week, down by 3,000 from the previous week. Not enough to move the meter on job creation. Kind of like the crew on the Titanic telling the captain waters still coming in, just not as fast.
Let’s face it folks there’s a lot of uncertainty in the nation today about the economy. The so called experts were surprised again this week by an unexpected drop in consumer confidence as the Thomson Reuters/University of Michigan index of consumer sentiment dropped to a one year low according to Bloomberg news. Quote: Concern that U.S. personal income taxes will increase next year caused an unexpected decline in consumer confidence in September indicating the biggest part of the economy will struggle to pick up. end quote.
The news from Bloomberg didn’t get any better when the Federal Reserve reported a drop of $1.5 trillion in households net worth to $53.5 trillion the first decline since March of 2009. Declining wealth, jobs, and confidence isn’t a good combination going forward.
Economist Nariman Behravesh said in the Bloomberg report quote:
The prolonged debate over the tax-cut extension is even more of a hurdle for decision-making by small businesses, which have put their investment and hiring plans on hold, Behravesh said. The longer it takes to reach a consensus, the more lawmakers risk causing a “wider ramification” for the economy, so they “need to get on with it,” he said.
“The uncertainty could translate into everybody trying to save a little bit more in anticipation of higher taxes,” Behravesh said. “I’m not saying consumer spending will collapse, but we could end up with very, very slow growth.” End quote.
As we have discussed for over 18 months it’s all about jobs. Jobs will determine the fate of local home sellers in the upcoming months. The uncertainty that is being caused by the government today delays any hope of job growth in the immediate future. As a result many home sellers that must sell will languish on the market, and others have made the determination to wait until after the first of the new year to sell.
The hope is by 2011 the elections will be over, the tax cut issue resolved, costs to hire a new employee resulting form taxes and mandates from Obamacare may be known, as well the costs of the new FinReg legislation. The potentially costly lame duck session of congress to citizens and businesses will be known. Hopefully as we enter 2011 this government induced stalled economy will be able to get started again.
Some how I get the feeling this could be a long winter.
On the bright side this week Dave Bakke reported Friday in the SJR that Springfield has been named one of the 20 Best American Cities for Job Growth over the next ten years. Bakke says this report comes via The Dailey Beast who used the projections from The Lloyd & Delphine Martin Prosperity Institute.
Those folks are supposed to be “the world’s leading think tank on the role of sub national factors-location, place, and city regions- in global economic prosperity. We’ll take all the good news we can. I just hope these folks are better at predictions than those economists who said housing had hit bottom back in August of 2009.
Make this a great week from Fritz and Krisite Pfister and the Pfister Success Team Inc, at RE/MAX Professionals of Springfield. This isn’t our first rodeo, if you have to sell your home give us a call at 652-7653. Nobody has helped more home sellers get sold this decade. We were pleasantly surprised when we were told that the PfisterTeam were the top producers at RE/MAX Professionals in the month of August, Woo hoo. Guess we’re doing something right in a down market. Oh that’s right, we’ve been here before! Give Us a call 652-SOLD.
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.
