Weekly Observation for July 11, 2009
July 11th, 2009The final numbers are in for June, second quarter, and first half of 2009 for home sales. You won’t read the official report for several more weeks in the paper. Once again the Springfield housing market proves its resiliency by weathering the recession better than most. Here are year over year comparisons.
June closed home sales up 7.43% to 390. Pending sales up 1.88% to 433. Median sale price up 5.9% to $119,950.
Second quarter closed home sales down 8.43% to 999. Sales pending down 2.03% to 1303. The median sale price up 1.85% to $110,000.
First half of 2009 compared to 2008. Closed home sales down 6.47% to 1647. Sales pending down 1.2% to 2323. The median sale price up 3.8% to $109,000.
On Sunday July 5 the SJR printed an economic report card. There were two major errors in their report. They reported that single family building permits January through May stood at 45 down 43.1%. There were 25 down 43.1%. They also reported the median sale price up 8.9%, the real number is 3.8%. I have no idea where they got their numbers. Perhaps they should tune into Let’s Talk Real Estate for the most accurate information regarding the local housing market!
Quoting from my January 16, 2009 weekly observations (which can be found at SpringfieldHome.com) quote: Wow, what a week you could have knocked me over with a feather when reading that the University of Illinois Springfield has forecast a rebound in the local economy this spring based on components such as housing starts, and home sales as part of their analysis! What do they know that we don’t? End quote.
Thursday’s Business section from the SJR headlines: UIS index shows area economy is slowing. Quoting from the article; A UIS index indicates “below normal” local economic activity for April and projects lagging growth for the rest of 2009. End quote. Perhaps the economics department at UIS should tune into Let’s Talk Real Estate also.
Here’s a bulletin for the SJR and UIS economics departments. Quoting from my forecast for the local housing market in December of 2008, also to be found at SpringfieldHome.com, quote; The number of new listings will continue to decline, with an estimated 5200 new listings predicted to be added to about 1650 to 1700 home listings to begin 2009. Listings added through the year in 2008 were down by 9.3% (-609), however were offset by a decline of 14.5% (-689) sales pending through December 26. Expect about 45% of available home listings to sell and close in 2009. The median sale price may decline 1% to 3% as a result of home sellers lowering prices to compete for the fewer buyers in the market in 2009. End quote.
The real story this year in the housing market isn’t the slight decline in the number of home sales, or the rising median sale price, it is the continuing decline in the number of homes being listed for sale. Although 609 fewer listings were taken in 2008, as predicted there were a whopping 572 fewer listings in the first half of 2009. This means the local housing market is returning to more normal levels of inventory. This is good news for local home sellers, and what I predicted for potential home buyers as the spring representing their best window of opportunity. It’s still a good time to be a buyer, however the inventory is down, and interest rates are up compared to the spring as predicted here.
As far as home prices are concerned I caution home sellers not to read too much into the median sale price increases. Although in June the median sale price was up $6,700 or by 5.9% the average sale price declined $7264 or by 5.1%. In the second quarter the median sale price was up $2000, or by 1.85%, however the average sale price fell $2636 by 2.03%, and in the first half the median sale price increased $4,000 or by 3.8%, while the average sale price fell $2354 down by 1.85%. The bottom line is don’t believe for a minute prices are rising at a level you can price your home high. Big mistake, you won’t sell. If you do, you probably won’t appraise. Short appraisals are up in 2009.
What will happen in the local housing market the remainder of the year? Consumer confidence and jobs are the key. You might add a little certainty into the mix. State employees, and city employees who make up the largest group of job holders in our market are facing very uncertain times. Until budget and job issues are resolved at the state and city, I wouldn’t bet on many of these employees rushing out to buy a house.
Then there’s the uncertainty created by the economic policies of the Obama administration. Seems they have missed the mark on every economic prediction they have made. With unemployment at a 26 year high, and predicted to go higher with Warren Buffet predicting 11% unemployment, combined with the failure of treasury to attract buyers for U.S. debt, together have resulted in the stock market to stall, and interest rates to go up. Not the foundation on which to build a recovery.
Now the Obama administration is moving forward with Cap and Trade legislation which is nothing more than an energy tax on every man, woman, and child in this country. The stated goal is to control our climate. The real goal is money, your money. With Obama failing to produce the results predicted, and having added more money to the deficit in the first six months of his administration than all other presidents in our history combined, they need money. Climate change at best is a disputed hypothesis, and at worst the biggest fraud in history perpetrated by U.N. scientists, Al Gore, Environmentalists, and Progressives, with the complicity of a sympathetic liberal media. Cap and Trade will cost the American people trillions of dollars, millions of jobs, and do nothing to control climate change.
The uncertainty regarding the economic policies implemented by the Obama administration, are not going to produce confidence. The Stimulus Bill which we were told was about jobs, turns out to be about pork, and government waste. Between the Stimulus, and the quadrupling of our national debt in one budget year, means higher taxes are on the way for all Americans. The average American is smart enough to know you can’t spend your way out of a recession, only the progressives, and the media believe that. This is causing the American consumer to pull back as witnessed this week with reports of retail sales falling at record rates, while the rate of savings went up to the highest level since 1993. Consumers are exercising caution.
These are sure signs that consumers are not confident in the radical changes taking place in their government and economy. Jobs and consumer confidence will determine how the local housing market performs the remainder of the year. My best estimate is that home sales and prices will continue to be soft, until there are significant signs of an economic turn around. Based upon the policies of the local, state, and federal governments it appears that any economic turn around may be a distance away.
There isn’t any evidence that would make me change my forecast from December that home sales will end the year down by about 11%, and the median price will decline slightly by 1 to 3%. I stated in my weekly observation of January 16, that I hope UIS is right and I am wrong, because I would rather be working in a growing market than a contracting market. That still holds true. We shall see.
The opinions expressed are solely those of Fritz Pfister, and not RE/MAX Professionals of Springfield or RE/MAX International.
