Fritz Pfister

July is in the books, almost. Realtors have seven days to report closed sales. Tune in next week to receive the final numbers. Here’s the preliminary report for home sales in the Springfield area for July 2010. Fair warning, I predicted that due to the significant decline in sales pending in May and June as a result of consumers shifting their buying patterns to take advantage of the governments tax credits, that July would be the first month showing a drop in closed home sales following an impressive thirteen straight months of increases.

Here’s the preliminary report for July 2010 compared to July 2009: Closed home sales of 214 down 171 from 385 or by 44.41%. Sales pending of 335 down 107 from 442 or by 24.2%. The median sale price $108,950 down $6,550 from $115,500 or by 8.26%. Not good if you’re needing to sell your home.

There are some bright spots to be gleaned from activity in July. The pace new listings are coming to the market slowed with 462 new listings 59 fewer than last year. However the 1755 homes listed for sale today is up 6% over last year due to the decline in sales pending.

Another bright spot is that sales pending are only down 24.2% following two months of 33% declines. That’s represents the bump in activity that I predicted based upon pent up demand building over nine weeks of declines following expiration of the tax credits. Local Realtors posted 99 sales pending the past week the best week in two months.

There’s risk when reporting on just one month, as local Realtors will find out following the SJR Business Section reporting the record median sale price for June in last Tuesdays edition. While they were reporting the old news, people who listen to Let’s Talk Real Estate were ahead of the curve receiving up to the minute reports that July prices were declining.

Sales were so soft in July, only one month following the end of glowing first half reports that closed home sales were up 15.7%, are now only up 4.37% year to date. The same holds true for the median sale price which was up by 1.7% at mid year and now has fallen back to even and trending down.

There were few bright spots in economic reports this week. The U.S. Department of Labor reported in the week ending July 24, the advance figure for seasonally adjusted initial claims was 457,000, a decrease of 11,000 from the previous weeks revised figure of 468,000. This was the third decline in four weeks but did not move the meter following the previous weeks increase of 37,000.

The GDP was reported yesterday and came in at an anemic 2.4% for the second quarter. Neil Irwin of The Washington Post reported businesses adding to their inventories contributed 1.05 percentage points to growth, and government spending added 0.9 percent to growth with stimulus spending winding down. The 22% rise in equipment and software spending by businesses was the only bright spot.

Irwin concluded: Put it altogether, and you have a lot of indicators that are neutral to negative, and only one clear positive. That leaves me feeling not very good about the outlook for the remainder of 2010 and 2011. End quote from business writer Neil Irwin of The Washington Post.

The really bad news this week was that consumer confidence fell to a reading of 50.4 as reported by Bloomberg, and this following a steep decline in the consumer sentiment index last week. The one main theme from all the reports I read is that it’s all about jobs. Consumers will not regain confidence until jobs are being created, regardless what the stock market does.

That brings me right back to where I started in December when looking through my crystal ball into 2010, that jobs and consumer confidence would be a drag on the market. Adding to a slowing economy is uncertainty for families and businesses who are attempting to calculate the financial impact of massive legislative bills passed this year in the form of health care, and financial regulatory reform. It may take years to sort that out as hundreds of new bureaucracies are established followed by the rules and edicts of those new entities.

Adding to consumer concerns about jobs and uncertainty are taxes. Locally county schools are asking for a 1% sales tax increase which would raise $19 to $20 million a year. District 186 still hasn’t announced how they plan to fund and move forward with their $252 million building proposal.

The state budgetary mess continues with Governor Quinn calling for at least a 1% if not 2% increase in state income taxes. The Obama administration will allow the Bush tax cuts for the top two tax brackets to expire harming a majority of small business owners. Capital gains tax rates will increase 30%, and taxes will go up on dividends depressing investment into the economy. The marriage penalty is reinstated, and the AMT will impact millions more families.

Nobody knows for sure what the final action will be regarding the Bush tax cuts. Congress must act first. If no action is taken that would mean every tax bracket would increase. There’s talk about allowing the top two brackets to expire to extending all the tax cuts for up to two years. We’ll have to wait and see.

With all this uncertainty created by government is it any wonder consumer confidence is in the tank?

Going forward in the local housing market sales will be slow but steady the remainder of the year with demand reduced to the basics; transferred, out or under grew the home, death, divorce, foreclosure, building a new home, to the desire to take advantage of record low interest rates. It doesn’t appear job creation will be adding many buyers to the market.

That brings me to the really good news of the week for the Springfield economy. After the State Journal Register reported one day that the state may not approve the building plans for St. Johns Hospital, the next day the plans were approved. Don’t  underestimate how great this news is. The health care community is the stabilizing force within our economy. Be sure to thank your local health care people whenever you see them!

Make this a great week from Fritz and Kristie Pfister and The Pfister Success Team Inc. at RE/MAX Professionals of Springfield. I need your help. My listing inventory is becoming depleted due to our successful marketing strategies. If you or someone you know is thinking of selling their home, I would appreciate the opportunity to interview for the job. Why call? Our listings sell at about twice the rate of the market average, and in about half the time of the market average. There’s more, however call us at 652-7653 and we’ll share with you how to get your home sold in these uncertain economic times.

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.