Fritz Pfister

A chill was sent down the spine of businesses across America when last Saturday the house of representatives passed their version of health care reform. Not because business owners don’t want reform to the health care system to get costs down, or to make insurance available to the uninsured, but because of the nearly $700 billion in new taxes, the majority of which fall squarely on the backs of business. What the good intentions and stated outcome of this legislation will accomplish is not what the actual bill will create according to numerous independent studies.

The housing market is rebounding thanks mostly to record low interest rates, affordable prices, and the first time home buyer tax incentive, and now the extension of that program expanded to include families that have owned their home five consecutive years of the preceding eight years qualifying for a $6,500 tax credit. Without question this will drive demand until expiration of the program on April 30, 2010.

However jobs are the key to the health of the housing market. Independent studies report the houses version of health care reform will cause one to one point six million job losses at a time unemployment is at 10.2%, predicted to rise to 11% by the middle of next year, with fifteen point seven million Americans without jobs. When the Department of Labor Statistics includes those who have given up looking and those working part time seeking full time employment, the actual unemployment/underemployed rate is 17.5%. The highest since 1983.

One would think the governments top priority would be the economy. No, it is health care that they claim is in such a crisis this legislation must be passed before the end of the year. My question becomes if health care is in such a dire crisis why is the plan not implemented until 2013, and why do the jobs killing taxes begin in 2010?

Let me see if I have this right. Speaker of the house Nancy Pelosi says that the plan will make health insurance available to millions more, drive the costs down, and make the system more efficient. OK. If you add millions of people to the demand side, with the same supply of doctors and nurses, costs will go down? That defies the laws of economics. Won’t the cost go up, and the time to receive treatment get longer?

The health care plan is now in the senate. If the senate passes a plan then both plans will go to conference to negotiate the differences, and then back to both houses for a final vote. There’s no guarantees anything will be passed. The point here is that businesses will be cautious about hiring until the health care issue is resolved. Not good news for those seeking jobs.

This week the National Association of Realtors reported the number of home sales increased in the third quarter, however the median sale price fell 11% to $177,900 with 123 out of 153 metropolitan areas reporting declines. The good news is that Springfield is one that reported an increase in the median sale price. Our median sale price year to date stands at a record high $109,000 up 3.8% on the year, however a whopping $68,900 below the national median sale price.

Downward pressure on home prices will continue across the nation due to the foreclosure dilemma. It was reported this week that the number of foreclosures will continue to climb in 2010, and 2011 before falling in 2012 to 2009 levels. The three factors for the continuing rise in foreclosures is due first to banks withholding properties from the market to prevent flooding the market with homes resulting from the meltdown of 2008. The resetting of 5 and 1 arms the next two years from homes purchased in the hot 2005 and 2006 markets, and continued job losses are the other two major contributing factors.

In every cloud there is a silver lining. Interest rates are at 40 year lows, home prices are extremely affordable, and the government is going to pay you up to $8,000 to buy a home compliments of the U.S. taxpayer.

Let’s add all this up for you. Unemployment is predicted to continue to rise through the middle of next year topping out at around 11%. Businesses will be cautious about adding jobs until the health care issue is resolved. If passed as in the house version more jobs will be lost. Interest rates will remain low until the Federal Reserve ends their program in the first half of 2010. Then mortgage rates will go up. Home prices locally are stable to rising, however extremely affordable when compared to the nation.

Here’s the silver lining folks. Now through April 30 will be opportunity time for home buyers and home sellers. Low interest rates, affordable prices, and the government paying you to buy a home.

That’s good news for now. There could be trouble to follow. Many buyers will buy before they planned, reducing demand for homes after April 30. Interest rates will probably start climbing about the same time. If predictions are accurate that unemployment will keep rising; then that will also take a toll on the number of home buyers after April 30. If you want to sell your home, now is the time to  act.

If you would like to take advantage of this unprecedented opportunity to  buy or sell a home now through April 30, call me at 652-7653. It would be my pleasure to help you develop a plan to achieve your goals. In response to this limited window of opportunity we have scheduled an additional free home sellers seminar on January 21, to be held at the Hilton Garden Inn. To RSVP call 652-7653, seating is limited. Reservations will be accepted on a first come first served basis. Learn from the systems that have generated over 30% more closed home sales than any other this decade.

Make it a great week from Fritz and Kristie Pfister of The Pfister Success Team Inc. at RE/MAX Professionals Springfield. Our systems are your solution. 652-7653.

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.