Fritz Pfister

As we watch the final days of July wind down, to see how the home market finishes, following the best month for home listings going under contract in June, in 15 months, the last week of July has hit a speed bump.

Just last week I reported the hard working Realtors had 105 home listings go under contract, tying the best week of the year, and only the fifth week sales pending eclipsed 100 in 2011. This week member brokers of The Capital Area Association of Realtors reported a stunning decline to only 75 home listings going under contract. The fewest in a week since March 26.

The big question I posed when the market finally experienced a delayed spring market rush, postponed in my opinion by consumer pull back over $4 a gallon gas, and record high food prices, was how long could the increased activity be sustained? One week does not make a trend so the upcoming weeks will tell us the story.

Last week I shared with you the greatest danger to the housing market would be rising interest rates if congress didn’t pass meaningful spending cuts to prove to the credit agencies Moody’s and Standard and Poors that the government was going to reign in out of control spending and take us off this reckless course to insolvency. Today, it doesn’t look good.

The house passed a bill that would not accomplish significant cuts, and was promptly tabled by the senate. Now we wait to see what deal was made in the smoke filled rooms while the house battled over a proposal, which was unnecessary because the house had already sent the senate the Cut, Cap, and Balance bill which would have raised the debt limit averting non payment of some of our bills, there never was a chance of default except from the demagoguery of the President, Democrats and their sycophants in the media.

The bill would have cut spending that would have hopefully satisfied the credit rating agencies, capped spending, and sent a Balanced Budget Amendment to the people for ratification. The senate tabled the bill, that’s why the Republican leadership put another plan on the table to avert the crisis atmosphere. The president nor the Democrats less than 4 days from the artificial drop dead date of August 2, have put forth any plan in writing. They preferred to make speeches and demagogue the Republican plans for which there have now been three.

I guarantee that the deal that comes from the smoke filled back rooms of the senate will not make serious spending cuts while giving the president authority to spend trillions more today. The plan that was tabled, and the one about to be proposed don’t cut spending at all, they merely reduce the rate of spending. The budget is automatically increased by 8% annually. So when you hear this bill or that bill cuts trillions in spending it’s not true. It cuts from built in increased spending. The CBO scored the house plan saying that the debt will rise to $24 trillion in ten years.

Not counting the estimated $64 trillion in entitlement liabilities this puts America straight on the path of a real default. I believe the credit agencies will downgrade the U.S. credit rating for the first time in history, not because the government took so long to raise the debt ceiling, but because the government continues to recklessly spend the country toward insolvency. The big government statists in both parties have allowed this unconscionable level of debt to occur. Only a few conservative house members stood on principle and voted against the plan, including our guest from last week Tim Johnson of Urbana.

This is critical what congress does in the end. I’m not counting on serious cuts because the Democrats in the senate have said they are against a balanced budget, and in fact haven’t passed a budget in over two years to mask the most profligate spending in our history. The president said he would veto a balanced budget amendment. Sorry Mr. President you have no say, it goes directly to the states for ratification if passed out of congress. But the point is our leadership wants to continue on this irresponsible path and the credit rating agencies are smart enough to see this. Thus the high probability we get downgraded.

This will be another straw on the back of the economy. Mortgage interest rates will go up at a time we have record foreclosures, a new home industry in depression, and home sales in a recession. Every economic metric is pointing down. GDP growth for the 2nd quarter came in at a pitiful 1.3%. The 1st quarter final revised GDP growth .4%, or as I have said, a flat lined economy, which Congressman Johnson said I was being generous with my description.

Initial claims for unemployment fell below 400,000 for the first time in 16 weeks to 398,000. Hopefully this trend continues but don’t count on it. Consumer confidence rose from 57.6 to 59.5 which means from a low F to a better low F, but still a failing grade. Consumer sentiment as measured by the University of Michigan fell to 71.5 from 74.3 which is a leading indicator for the direction of the next consumer confidence report.

The president’s policies are preventing the private sector from recovering. The most spending in the shortest time in history, $4 trillion dollars in less than 3 years should prove once and for all government spending is not the answer to jump starting an economy. The government does not create wealth as Professor Judd tells us, the government does not create jobs, the private sector does. Until the private sector gets some relief from the oppressive new laws, Obamacare, and Frank Dodd Finance Reform, and from the dictatorial bureaucrats at EPA implementing rules that are going to eliminate hundreds of thousands of jobs, we will have no recovery.

Big headlines on the Business section of today’s SJR; Another recession coming? I have some news for the AP writers, we’ve never been out of recession. We had a temporary bump from the government spending that has now faded into a heavy repayment burden upon the people. The recession ended for Wall Street, Big Banks, Insurance Companies, and Car companies because you the American taxpayer bailed them out.

For the average American and Illinois family there has been no relief. Perpetually high unemployment, high gas prices, high food prices, high energy prices, and thanks to the state of Illinois a 67% income tax increase. The unemployment rate for Illinois increased to match the nation’s 9.2% with another 19,000 jobs lost. Springfield unemployment came in at 7% tied with Bloomington for the lowest in the state but up from 6.2% the previous month.

Am I reporting nothing but gloom and doom? Absolutely not, just reporting the facts on the ground, and not the spin you get from politicians and the media. The good news is that I am simply amazed, and you should be too, at the resilience of the Springfield Illinois housing market’s ability to muster the best activity in 15 months in the face of all the harm the federal and state governments have caused the the private sector.

Let’s hope the stunning drop in sales pending this week was only a speed bump slowing us down just for the moment and we pick back up in the coming weeks. I wouldn’t be surprised because Springfield just isn’t anyplace USA, we enjoy bucking the national trends.

Has the Springfield housing market hit a speed bump or a wall? Stick with me here to be the first to know.

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.

The AP article ‘Default could be disastrous for the economy’ is patent nonsense, and shows the lack of honesty by today’s media as mere sycophants repeating White House claims.
The claim is if the debt limit is not increased we will go into default. False. You only go into default if you stop making payments. Tax [...]

Are you familiar with Groundhog Day? Not the one with the shadow, the movie one where every day the same thing happens over, and over?
From the SJR February 17, headline; Gasoline prices hit another low for 2010. February 20 headline; Two-week rise puts oil prices near $80.
February 17 headline; Economic signs boost stocks. February 19 [...]