Fritz Pfister

It was nice to hear the positive report from The Capital Area Association of Realtors regarding third quarter home sales and home prices. What I reported here four weeks ago but with perspective the Association’s report lacked.

The Association accurately reported the 932 home sales in the third quarter were up 22.3% over third quarter 2010. What wasn’t reported is that third quarter home sales in 2010 were the worst on record, or that the five year average third quarter sales from 2006 through 2010 of 1037, means Q3, 2011 were 10% below the five year average. But a 22.3% increase without perspective sounds better.

The Association doesn’t track the five year averages, however I do because it is important to track today’s performance to historical sales data to learn where the market is trending.

The increase in the median sale price that was reported at $114,900 up 5.31% over Q3, 2010 is also true and accurate, however is no big deal. The year to date median sale price is $110,000 down fractionally from last year, however proves that we are an affordable market more than it proves prices are rising.

In the face of interest rates making home buying the most affordable since the 30 year mortgage was invented, home sales prove to be the barometer for the overall economy.

Here are the final numbers that the Association will report in the next week or two for home sales in October of 2011 compared to October 2010; closed home sales of 237 down 13.5%, home listings going under contract 267 down 2.9%. The median sale price of $103,000 down 6.36%.

For the five year average to give you perspective on the market trend, October 2011  closed home sales down 23.15%, and home listings going under contract down 21.4%. The barometer is falling.

In the fall of 2010 President Obama and his Interior Department implemented drilling bans and moratoriums for domestic oil. Speculators and OPEC saw this act to limit worldwide supplies and took advantage by driving up the price for a barrel of oil.

This resulted in a new record high price per gallon of gas Americans had to pay in December of 2010 as reported by money.cnn.com on December 23, 2010 {quote}: Gas prices were poised Wednesday to top the milestone $3 mark for the first time since Oct. 17, 2008 {end quote}. This was long before any unrest in the Middle East sent prices over $4 a gallon causing the economy to falter in the spring of 2011, as consumers pulled back due to gas and food prices decimating their disposable incomes.

President Obama for the umpteenth time this year said he was pivoting to focus like a laser on jobs. He did this week when he delayed the Keystone XL Pipeline that sent 20,000 union construction jobs and 350,000 ancillary jobs up in smoke. Fourteen thousand of those would have been Illinois jobs according to The Illinois Petroleum Council. This was done to appease the radical environmental wing of his party for reelection purposes. Obama proves once again he believes his job is more important to him than jobs for working class middle Americans.

This December consumers face another new record for gas prices resulting from Obama energy policy. To make matters worse for Illinois consumers they now have had their disposable income attacked by the state’s 67% increase in personal income taxes. This has placed the Illinois economy on life support by leading the nation in job losses and the unemployment rate rising back into double digits. Meanwhile the inept Governor Quinn tries to repeal the tax increase for major corporations threatening to leave, to stop the hemorrhaging of jobs from the state.

Is there any more evidence needed that the reason Springfield families have seen home sales fall from a few short years ago from 4100-4200 annually to 3100-3200 today than the lack of jobs? The increased cost of living that are the direct result of government policy, energy by Obama, and taxes by Quinn dampen the very private sector they need to rebound to add tax payers. These are the unintended consequences of progressive ideology clashing with the laws of economics. The economy cannot improve under these policies.

John Ransom finance editor for TownHall.com appeared on Let’s Talk Real Estate Saturday November 12, 2011. The podcast should be up at Wmay.com by Monday or Tuesday. His predictions for the next year are attention grabbing. Following meager increases in Q4 2011, and Q1 2012 he predicts that a doube dip recession will be declared by Q2 when the economy slows again.

Ransom predicts that confidence will rise along with the economy in Q3 when it becomes apparent Obama will be defeated, along with progressives in both houses of congress. Ransom agreed with my position that the reason we don’t have job growth today is due to the job creators fearing the current government. These businesses just don’t know what can be expected to be thrown at them next by the Obama administration.

It appears we will have job creation when we place the one out of a job who is preventing job growth, and economic recovery by making political decisions instead of economic decisions.

If you want to track how the Springfield housing market will perform, just watch the jobs market. Where the jobs market leads the housing market will follow. I will be making my annual predictions for the local housing market on December 31 on Let’s Talk Real Estate broadcast at Wmay.com and AM 970 Saturday mornings ten to noon central.

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.

Many folks were shocked to learn of the drastic slowdown in home sales in the Springfield area this summer. The housing market’s cash for clunkers moment following government intervention into the market with tax incentives to purchase a home. July’s 233 closed home sales were more like December activity than what this normally steady and [...]