The preliminary home sales figures are in for November as reported by member brokers to The Capital Area Association of Realtors MIS. Closed home sales of 234 up 1.73%. Home listings going under contract 283 down 1.73%. Compared to the November five year average 2006 through 2010 closed home sales down 16.6%, listings going under contract dead even.
Not bad considering the economy of the state and nation. To know where home sales are headed you look at where jobs are headed. Job growth is the most important factor to today’s housing market. Government tax credits and all time record low interest rates failed to move the needle on home sales which leaves the number of buyers entering the market due to job creation as the key factor.
One must be careful how they translate the November jobs report, and consumer confidence. We have indeed had some positive economic signs the past couple weeks, and we’ll take it. At issue is how it is reported. The AP for example report more as stenographers without any journalistic curiosity by passing along what they are handed by government officials.
From AP in today’s SJR page two story with Headlines: “Jobs report could help White House”. Why? Because the election hinges upon jobs and the economy. After deficit spending over $4 trillion dollars the economy has lost over two million jobs when the president said government spending would create jobs. I think we can put that theory to bed.
The AP [quote]: November’s sharp drop in the unemployment rate shows that jobs are finally moving in the right direction and suggests the economy is on firmer footing as the country heads into the election year. The Labor Department reported the jobless rate fell to 8.6% in November from 9% the month before, a 2 1/2 year low. [End quote]
Granted the AP continued to say that’s still historically high unemployment, but did so without explanation. Allow me to finish their reporting for them. Here’s the true trend on unemployment. Initial claims for unemployment have risen three straight weeks and surpassed the 400,000 mark. Above 400,000 claims means anemic to no job growth, below 400,000 increasing job growth, below 375,000 significant job growth. This data proves AP’s claim that jobs are moving in the right direction is misleading.
It’s true the AP also reports that 300,000 stopped their job searches and were no longer counted as unemployed. This is wrong on two counts. From the Business Insider Mish Shedlock reports the following [quote]:
In the last year, the civilian population rose by 1,726,000. Yet the labor force fell by 67,000. Those not in the labor force rose by 1,793,000. In November, those “Not in Labor Force” rose by a whopping 487,000. If you are not in the labor force, you are not counted as unemployed. Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%. [End quote]
So you see the AP has it wrong twice. There were 487,000 people who gave up job searching not 300,000, and they failed to explain the reason for the sharp drop in the unemployment rate was due to people no longer being counted. How many people will form a false opinion based upon this incomplete, inaccurate, and misleading article? Who knows, but at least you know the truth.
In all honesty things are not looking good in the Illinois economy. Reported in the media yesterday and in today’s paper is University of Illinois economist J. Fred Giertz who said in an analysis that a strong start to holiday sales is a good sign for economic recovery. I may be wrong but I don’t think when consumers hold back spending throughout the year and then go spend money during over hyped Black Friday and Cyber Monday is an indicator of recovery. Perhaps Professor Giertz is doing a little cheer leading. We’ll see.
Why do I say the Illinois economy isn’t looking good? Two reports. Yesterday a report on the worst managed states. [Quote]: For the second year, 24/7 Wall St. has reviewed data on financial health, standard of living and government services by state to determine how well each state is managed. [end quote]
You can read the report at the businessinsider.com which shows Illinois is the second worst managed state in the nation behind only California. This came on the heels of a report released this summer of a survey of five hundred fifty CEOs who ranked Illinois 48th best state in the nation to do business with only New York and California as a worse states to do business. The report can be read on the San Jose Business Journal site.
This is why I say the Illinois economy isn’t looking good going forward. These are the people that matter. Illinois is in the jobs salvaging business instead of the jobs attraction business. Most of the businesses who have stayed or moved to Illinois had to be bribed with taxpayer money.
The most recent example of the Sad Sack state of Illinois as both a bad place to do business and as a worst managed state came to the fore in a report this week from Caterpillar out of Peoria. Caterpillar is looking to build a new plant with one thousand new jobs and announced Illinois was being considered. Then this week the legislature failed to extend a tax credit that is necessary for Illinois to compete for the plant.
It will probably pass in separate legislation however here’s what Cat spokesman Jim Dugan said, [quote]: Inaction on the tax credit is an example of a much, much broader, deeper, fundamental issue and problem for the state. We have a state that’s clearly lost without a rudder in the midst of a company like Caterpillar with 23,000 employees in Illinois. The problem is there’s no long-term stability or predictability in state policy for the company to depend on. [end quote] Are the Three Stooges in charge of Illinois government?
Oh there’s more. The owner of the Chicago Mercantile Exchange and Chicago Board of Trade met with the Indianapolis mayor to discuss moving these 150 year old Illinois companies out of Chicago. The state of Ohio offered up $400 million in incentives for Sears to move their headquarters and 6,000 jobs to Ohio. And Professor Giertz says we’re looking good because people went Christmas shopping?
How jobs go, so goes your housing market. Government policy at the federal level prevents job creation and in Illinois the Democrats tax increases on people and business chases jobs away. I think we have identified part of the problem. Government.
The other part of our economic problem? The media. Specifically the lack of journalism and investigation beyond the story line handed to them by government officials with political motives. One last example of misleading journalism from today’s SJR Business section AP article; Diane Swonk chief economist with Mesirow Financial [quote]: We might finally be seeing new business creation expand again, which is critical to the sustainability of the recovery. [end quote]
Yo Diane, from us little folk out here in the heartland, take our word for it, there is no recovery. Perhaps J. Fred and Diane could team up to do the cheer leading routine for Saturday Night Live.
Stay right here, tune in weekly to Let’s Talk Real Estate on WMAY, or check out my weekly Springfield housing market report on Facebook or Youtube. That is if you want accurate and complete reporting about the Springfield Illinois housing market. Your alternative to inaccurate, incomplete, and misleading news reports based upon information obtained from cheer leading economists and politically motivated government personnel.
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.
