Fritz Pfister

The Capital Area Association of Realtors member brokers are all smiles in this winter that isn’t. Between the pent up demand that had to be building from the slowest year for home sales since 1998, and interest rates that are unreal, spring like weather drew prospective home buyers to the market in numbers not seen since 2007 before the historical meltdown.

Realtors have three more days to report closed sales so these may change a bit, however here are the housing numbers for January 2012 compared to January 2011 as reported by member brokers to the MLS: new listings 318 down 3.04%; closed home sales 183 up 2.23%, listings going under contract 295 up 21.9% better than the 294 in 2008 before the meltdown, but still far behind the 360 in 2007. The median sale price of $111,000 was up 1.36%

All in all a great start to the year. Comparing January to the five year average to give us some perspective closed home sales were dead even with the average, and believe me after the past four years even is great, and the listings going under contract are up 3% over the five year average.

January of 2011 was the only month the entire year to beat the five year average. With the surge in sales pending in January there’s no doubt February will finish well up over last year and hopefully the five year average. I must temper my enthusiasm because they all won’t close. The rate of failed contracts remains fairly high between 15% and 20% failing to close.

There was good news on the jobs front as reported by AP in today’s SJR Business section regarding unemployment. There was a net 243,000 jobs created in January and the unemployment rate was reported to drop to 8.3% the best since February of 2009. Locally in December unemployment was reported at 7.5% up a .5% from 2010, and the state unemployment rate was 9.8% up .6% from 2010.

Once again I must temper my enthusiasm because this is an election year. The Secretary of Labor will put the best light on unemployment numbers as possible for her boss because the economy is the number one issue on voters minds. The AP which occasionally performs complete journalism also is overtly for President Obama’s reelection, and therefore didn’t provide the whole story on unemployment, only the favorable news. In my opinion the act of omission is as great a sin as the act of commission.

Here’s what the AP left out of their reporting. They reported in their subheadline “Surge drops jobless rate to 8.3%”. This is patently misleading, and probably on purpose. What the AP failed to report is a record 1.2 million people dropped out of the labor force a record for any month ever, and the participation rate fell to 63.4% of Americans working, the fewest since Jimmy Carter was president. Here is a link to the Bureau of Labor report that AP conveniently omitted: http://www.facebook.com/l.php?u=http%3A%2F%2Fdata.bls.gov%2Ftimeseries%2FLNS11300000&h=VAQGe68PfAQE-LrapfCTSIQY1WRwekTYSJyyVTSRCSHw3wg

The truth is the 1.2 million workers no longer counted is the reason for the drop in the unemployment rate to 8.3%. The CBO reported this week that if the number out of work were compared to the number of jobs in America when President Obama took office the unemployment rate would be 9.8%.  When comparing the number out of work to the number of jobs in America in December of 2007, the month the recession began, the unemployment rate would be 11%.

In this election year when so many bureaucrats need to spin the economy to look good so they can keep their jobs if their boss is elected, I have decided to go with Gallup’s report on unemployment. They don’t have a dog in the hunt. Here’s a link to Gallup’s January 2012 unemployment report: http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.gallup.com%2Fpoll%2F152432%2FUnemployment-January.aspx%3Futm_source%3Dadd%2Bthis%26utm_medium%3Daddthis.com%26utm_campaign%3Dsharing%23.Ty0hzmngwcs.facebook&h=aAQH5Vt7VAQGRQpw2pCBSn2H9cchcBfgMkCq1dIFZ5oIyQQ

Gallup says unemployment in January is 8.6% and the underemployment rate is 18.7%. Below are the graphs on unemployment rates. You must add the unemployment rate with the underemployment rate to arrive at the total percentage rate of unemployment at 18.7%.

As good as the news is about the 243,000 jobs created I remain cautiously optimistic knowing this increase in jobs remains tepid. Professor Judd says that we need 300,000 net jobs a month for 36 straight months to bring unemployment back down to 7%. This is but one month but it is the closest we’ve been to reaching that 300,000 mark in years.

We’ve got to be encouraged that jobs at least appear to be going up. Shows the true grit of the private sector struggling to create jobs in the face of the massive impediments government has placed upon them with billions of dollars in new regulations from the most massive and intrusive laws in history that are stifling growth; Obamacare and Dodd Frank.

Although the administration crows about 1.82 million jobs created last year, you need about 1.4 million just to meet demand for new entrants entering the labor force, all the while millions no longer counted wait to return. We’ve a long way to go.

The economy cannot recover until housing recovers because 1 in 4 jobs is tied to housing. Manufacturing jobs were up 50,000 in January and have been the bright spot in the economy the past three years. Following the worst year on record for new home sales and construction, and the second worst year on record for existing home sales, just imagine how many manufacturing jobs would have been created if housing had recovered.

The president came out this week with a plan to help underwater homeowners. This will be a topic for another day, but let me just say it’s like a Christmas present from your grandma, you’re not sure what’s in it, but you’re pretty sure you’re not going to like it. In a nutshell this new program will be a boondoggle, will add massive amounts to the deficit in spite of what the president has said, and will only delay once again the housing recovery. Housing must hit bottom before it can rise back up. Government intervention only delays the bottom.

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.

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