Weekly Observation for May 15, 2010….Changing Housing Market, Springfield Illinois
May 15th, 2010We now have two post tax credit to buy a home weeks on the books. I predicted a slow down once the incentives expired. Before we look at these numbers, here’s a quote from Linda Nelson President of The Capital Area Association of Realtors contained in a news release on first quarter home sales: Quote
“While home buyer credits will spur the market during the first half of 2010 we are optimistic that steady consumer demand for housing and good market fundamentals will maintain this momentum through the balance of the year.” End Quote.
I seem to have a difference of opinion. I hope Mrs. Nelson is right. My question is what does the association consider good market fundamentals? Low interest rates are good. A reasonable supply of homes for sale is good. But aren’t jobs part of ‘good market fundamentals’?
My assessment is that high unemployment, with few jobs being created, doesn’t add up to any significant numbers of buyers being added to the market for the remainder of the year. Where will demand for homes come from then?
Regardless here’s the numbers for the first two weeks in May compared to last May, remembering that two weeks do not make a trend, however can be an indicator of where the market is headed.
Upon the strength of homes going under contract in April closed sales are up 36.11%. This is no surprise, I predicted May would set a new record.
What is surprising is the number of new listings coming to market which are down 36.82%. Good news for home sellers that must sell. Less competition.
Compared to last May the number of listings going under contract are down 16.25%. This number could have been greater, however the momentum from the busiest April on record probably carried over into these first two weeks. The final two weeks of May will be more telling.
Compared to the first two weeks of April when the tax credits were still available, listings going under contract are down 35.6%, 170 compared to 264. Not surprising.
Jobs are the key to whether we have a rising, flat, or declining housing market. This week the Bureau of Labor statistics reported the number of first time claims for unemployment fell 4,000 to 444,000 from an adjusted 448,000 the prior week. Although this was the fourth consecutive weekly decline, the numbers are disappointing and indicates lackluster job creation.
In today’s SJR Business section the headlines read; Stocks tumble as worries about Europe return, and Euro sinks to nearly a four year low. What does this have to do with home sales in Springfield Illinois?
The European socialist countries are seeing their economies crumble. Greece landed a trillion dollar bailout from the European Union and IMF of which the U.S. contributed $50 billion. The Federal Reserve also opened an undisclosed line of credit to European banks. It seems the administration views the collapse of European economies as a threat to our economy. They are right.
Greece has discovered their socialist entitlement state is unsustainable. The strings attached to the trillion dollar loan called for Greece to change structurally. The government is to get out of the health care sector, transportation and energy sector, and to cut spending. This led to riots when the entitlement minded citizenry learned the gravy train was over because there was no money left. Without structural change the bailout will only delay collapse. That’s why our market is nervous.
In Spain the government took bold action no other socialist country has ever taken to head off financial collapse. Spain cancelled all public union raises and ended all green projects. Following the report by Spanish University economists that the green economy drove unemployment to 20% because for every green job created 2.2 other jobs were eliminated. Spain learned the hard way, going green doesn’t mean jobs.
What does our government do? Passes the biggest entitlement program in history, the health care bill, while unemployment is at 28 year highs, tax revenues are down, and borrows 43% of all the money government is spending. While Greece is to privatize the health care industry, America does the opposite. Obamacare will prove unsustainable.
How do we know? The CBO released revised estimates for the cost of Obamacare this week. With one stroke of the pen the CBO now estimates Obamacare at over a trillion dollars, and (surprise!) says Obamacare won’t lower deficits. This is the CBO that missed the estimated cost of Medicare by ten times the actual costs. Independent estimates are for Obamacare to cost $2.5 to $3.5 trillion the first ten years, at a time America is broke.
While Greece and Spain are eliminating unionized government jobs, freezing pay, and lowering benefits, America is doing just the opposite. This places America on a path to a day of reckoning just as in Europe today.
Socialism is failing on a grand scale in Europe and it will in America too. As the private sector gets buried in the high cost of Obamacare, debt, and deficits; the senate introduces economic disastrous cap and trade legislation this week.
Are we headed for the same results as Spain? The Heritage foundation projects the loss of 2.6 million jobs over ten years if Cap and Trade is passed, and will add $160 billion annually in costs to American consumers. Even those earning less than $250,000 a year.
Why is the Obama administration pushing ahead with Cap and Trade? Control and power. It has nothing to do with saving the planet. Climate Change is at best a gross exaggeration, and at worst a fraud. Putting that aside here’s what you as a homeowner can look forward to.
Preliminary reports say the bill would require every homeowner to obtain a license to sell their home from the EPA before title could be transferred. You would have to have an energy audit completed by the EPA to receive their permission to sell your home. A bureaucrat will tell you whether your insulation, windows, appliances, furnace, air conditioner, and water heater meets their approval.
This portion of the Cap and Trade bill in the house was removed due to lobbying efforts by the National Association of Realtors. It’s back in the senate version. It has a chance to be dropped again, however there is a good chance the radical left environmentalist representatives would put it back in during conference to reconcile the two versions of the bill.
Cap and Trade legislation must be stopped in the senate. It is a power grab second only to the health care bill. Neither law will accomplish what you are being told. Obamacare must be repealed to avert crushing costs to the private sector, and Cap and Trade defeated to have any chance at meaningful economic recovery.
That is why what is happening today in Europe should be important to home owners in Springfield Illinois. President Obama is taking America down the same path that has Greece, Spain, Italy, Ireland, and Portugal on the verge of collapse. One that will harm not help the Springfield housing market.
Last week I shared with you that I am cautiously optimistic, and am still today. Why? Because the American people are awakening to the disastrous economic and social policies of the Obama administration. Because the American entrepreneur will overcome the Obama oppression against the private sector. That’s what entrepreneurs do, overcome challenges. Unlike bureaucrats, and ideologues who create challenges.
For the short term the jobs picture doesn’t look good. Stimulus, and Capital plans may provide a temporary bump in jobs, but not for the long term. The November elections will be of paramount importance to the future of America.
Voters can choose representatives that support Obama, big government, deficit spending, and higher taxes, or vote for representatives that believe in limited government, less spending, and lower taxes.
Voters will choose whether the government should make their health care and energy decisions, or whether people should be free to make their own choices.
The private sector creates jobs, not government. Today’s government stands in the way of an economy ready to explode with growth. The weight of debt, deficits, taxes, rules, and regulations is preventing explosive growth that would put 15 million Americans without jobs back to work.
Here’s to a November that will bring real hope and change to America. Until then it is up to us to let congress know how we stand on the issues. I have a feeling representatives that continue to ignore the will of the people will find themselves in the unemployment line. Poetic justice.
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.
