Weekly Observation for December 24, 2011: Best Christmas Gift for the Local Housing Market, 2011 Almost Over
December 24th, 2011On behalf of my wife Kristie, fellow Pfister Success Team members Denny Pryor, Keith Haynes, Amy Mason, and Teresa Singer; we wish you a Merry Christmas, and a prosperous and Happy New Year!
The best gift any real estate agent could receive is the knowing that 2011 is almost over. There is hope, just as with Cubs fans, that next year will be better. One week from today on New Year’s Eve I shall make my predictions for 2012 in the local housing market right here and on Let’s Talk Real Estate at Wmay.com or AM970 Wmay.
Let’s do a quick review to see how my predictions for 2011 have stacked up to the actual housing data with one week remaining in the year. Quotes from my January 1, 2011 Housing Market Forecast compared to actual housing data:
We should see home sales decline no more than 5% to between 3300 and 3400 home sales for the year.
{With one week remaining in the year, 3152 closed home sales have been reported, seems I was a bit optimistic. Look as if sales will be down about 6%+ to the fewest in the MLS since 1998}
The inventory of homes for sale should remain in the 1500 to 1800 range through the primary spring and summer selling seasons then fall below 1600 in fall and winter markets. Due to weaker demand, fewer than half of home listings will sell.
{The inventory ran a bit below what I predicted with 1494 for sale today, seems people are hunkering down, especially those who have refinanced at record low interest rates. That will hurt future supply and demand when interest rates go up. Year to date 48% of listings have sold.}
Prices will decline slightly. I anticipate the median sale price in 2011 to finish the year between $107,000 and $109,000.
{With one week remaining the median sale price is $110,000 a bit above my forecast, which is good news. Record low interest rates helped support prices, however not the number of sales. Demand was weak due to a lackluster jobs market.}
I believe there will be a similar number of permits in 2011 with between 90 and 100 single family permits issued in 2011. (single family building permits in Springfield)
{Through November 103 single family permits were issued, however if you deduct the 28 issued to The Springfield Housing Authority for government housing there were only 75. Seems I was a bit optimistic here as well. Incredibly few new homes built considering record low interest rates.}
Interest rates should run from around 4.75% early in the year to a high of 6.5% to 7% by years end.
{Interest rates have fallen to record lows due to a stagnate economy. Federal Reserve Chairman Bernanke announced this summer due to the bad economy he was going to hold the cost of fund rate near zero through 2013. Without significant economic growth, inflation will lay dormant and will not ignite until there is recovery.}
It will be a very good year for home buyers. Low prices, low interest rates, great choices, and less competition than in 2010.
{Spot on.} [end quotes]
In housing news this week it seems the media continues to cheerlead. The most recent example from The State Journal Register this week in the Business section. Wednesday Big headlines at the top of the page: Increase in home construction suggests industry turnaround. An AP story. Then on Saturday in small headline at the bottom of the page: Tiny increase in new-home sales. Source not identified.
As we have come to expect investigative journalism doesn’t match the curiosity of a three year old. The big story was the annualized rate of 685,000 construction starts was up 9.3%, although a healthy market will have 1.2 million. The majority of starts were apartment construction. November’s annualized single family starts number of 447,000 was actually lower than the starts in November of 2010 of 454,000. Hmmm a decrease in home construction year over year ’suggests turnaround’?
Rubbish, mere cheerleading, total lack of curiosity to look beyond the government spin, and here’s why. The Commerce Department reported new home sales increased 1.6% in November to an adjusted rate of 315,000, less than half the 700,000 in a normal economy. The only thing to be decided when December is reported is whether 2011 will be the worst year for home construction in 63 years or the next to worst year.
We did in fact have some good news on jobs again this week with initial claims falling below the 375,000 mark which is the barometer for meaningful job growth. Don’t get too excited yet, this was the first time in three years it fell this low. I am cautiously optimistic because we desperately need jobs, however as a realist I know that seasonal Christmas hiring is a factor, and that one week does not make a trend.
Tune in next week when I make my fearless predictions for the Springfield Illinois area housing market. For now real estate agents, title companies, appraisers, home inspectors, home builders, and loan officers are glad that the slowest year for home sales in 13 years is about in our rear-view mirror. That’s a gift we all look forward to this Christmas.
The best gift however is that 2012 is a presidential election year. Voters will determine once and for all what direction the people of America want to take. Will America embrace the big government solution of Democrats and Obama? The vision that Obama laid out in his Osawatomie speech saying; “limited government and free markets don’t work and never have.” Is Obama denying the American idea? That limited government, and free markets enabling the individual to pursue their own happiness didn’t create the highest standard of living in world history? If true, his is not an American view, or accurate accounting of history.
I pray this Christmas the American people choose to return to our founding principle of limited government and individual liberty within a free market economy. The massive progressive laws Obamacare, Dodd Frank, radical environmentalism leading to economically crushing regulations must be lifted, repealed and replaced if our children are to have a future free from the shackles of debt, and a return to prosperity. The choice is stark; the tyranny of the central planner, or freedom and prosperity for the individual possible only with limited government.
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.
