Fritz Pfister

The SJR reported yesterday the home sales report for August released by the Capital Area Association of Realtors. The report was included within a column with the Headline; Local indicators show slow improvement. The article was broken into two subheadings; Unemployment and Home sales.

One clarification from the report that the 7.5% unemployment rate for Springfield was the lowest since 2008 before the meltdown, and below the 7.8% last August. Don’t be confused this was the lowest for an August since 2008, the unemployment rate was 6.2% just this past May. Therefore I take issue with the use of indicators showing improvement in the main headline, it’s misleading. Granted we all should be happy with 7.5% unemployment when the national rate is 9.1% and the state is 9.9%, but it’s not time to be singing Happy Days Are Here Again.

Under the home sales section of the article some clarification is needed as well. The SJR stated that year to date through August sale totals of 2178 represented a 9.1% increase when in fact it represented a 9.1% decrease. To place this in proper perspective, the 9.1% decline this year through August is behind a year with the fewest home sales in our market since 1999.

It certainly is appropriate that the paper finally include unemployment with home sales in the same report. At least they are implying the connection which I have been making for you the past three years. There’s more evidence this week that jobs are the key to a recovery in the housing market in Springfield.

This past week there were only 67 home listings that went under contract, 71 the week before, and 65 the week before that. That’s 11% fewer than during the same time last September and the fewest since February of this year.

Proof positive that the lack of job creation is slowing home sales. Why? Because we have the highest inventory of homes for sale in three years and interest rates continue to fall to the lowest on record. If there’s no shortage of homes to choose from and mortgage money is the cheapest on record what else could be causing this falling demand for homes?

There are other contributing factors other than people without jobs don’t buy homes. People with jobs that have no confidence, or who are concerned they may lose their jobs, and who have had their disposable income decimated by massive tax increases and rising gas and food prices aren’t going to be buying homes either.

In other news nationally existing home sales jumped by 7.7% in August while Springfield jumped 39%. However the Springfield increase sounds better than it is because last August was the worst on record while coming in 3.4% below the five year average for home sales in August from 2006 through 2010.

News on new construction reported this week in the SJR also needs clarification. On Tuesday the National Association of Home Builders reported that builder sentiment fell again this time to a reading of 14 with 50 representing confidence. Not surprising the next day the SJR reported with big headlines Housing starts decline. New home construction slid another 5% in August. Nationally new home construction is in a depression.

The clarification is needed on the report by the SJR for local building permits. Quote: Builders in the city of Springfield took out 15 permits for single family housing construction in August matching August 2010. But the 87 building permits issued January through August still was ahead of the 78 for the same period in 2010. End quote.

If you remove the 28 permits issued to the Springfield Housing Authority in January for their Genesis public housing project we are not ahead of 2010 through August. In fact we are at the slowest rate of building with the net 59 through August since the high interest rate years of the early 1980’s.

Yes we are blessed to live in a stable real estate market like Springfield. But you need the whole story. The paper is trying to put the best spin on the economy as possible with the way they reported unemployment, home sales, and building permits. The association of Realtors are the official reporting source for the paper but they too have a vested interest in reporting as favorably as possible.

Then there’s my web site SpringfieldHome.com and my radio program Let’s Talk Real Estate that gives you the whole story. Sure I want local consumers to have a positive outlook on the economy and the housing market because that helps increase sales from which I support my family. However I believe it more important that consumers receive the whole story so they can make informed decisions. Incomplete or misleading information can cause the consumer to make poor decisions which could harm them.

Repeating from last week, we are not in a down market cycle with an up cycle around the corner. We are in a new evolved economy following a recession that began in 2007 that ended in June of 2009, and the financial meltdown in the fall of 2008. We now suffer a moribund economy as a result of governments reaction to both.

When President Obama announced his economic policies I said I hope he succeeds, but I doubted his policies would improve the economy but rather would harm the economy. On this point I am sad I was right. Billionaire Steve Wynn said it best at a shareholders meeting for his Wynn Resorts this past July, quote:

“This administration is the greatest wet blanket to

business, progress and job creation in my lifetime . . . I

could spend the next three hours giving you examples

of all of us in this marketplace that are frightened to

death about all the new regulations, our health care costs

escalating, regulations coming from left and right.

“. . . Everybody complains about how much money

is on the side in America. You bet, and until we change

the tempo and the conversation from Washington,

it’s not going to change. And those of us who have

business opportunities and the capital to do it are going

to sit in fear of the president. And a lot of people don’t

want to say that. They’ll say, ‘God, don’t be attacking

Obama.’ Well, this is Obama’s deal and it’s Obama that’s

responsible for this fear in America.

“The guy keeps making speeches about redistribution,

and maybe we ought to do something to businesses

that don’t invest, they’re holding too much money. We

haven’t heard that kind of talk except from pure socialists.

Everybody’s afraid of the government and there’s no need

soft-pedaling it, it’s the truth. It is the truth.

“And that’s true of Democratic businessman and

Republican businessman . . . I’m telling you that the

business community in this country is frightened to death

of the weird political philosophy of the president of the

United States. And until he’s gone, everybody’s going to

be sitting on their thumbs.”

End Quote. Steve Wynn is a Democrat who supported Obama in 2008.

The bad news is that Wynn made these comments before President Obama announced his jobs plan at a joint session of congress or his Rose Garden speech calling for increased taxes on the rich and corporations. The truth is that raising the taxes on the rich will cause more job losses as the tax increase will impact small businesses who are needed to hire to reverse the perpetually high unemployment in this nation. How will this class warfare campaign strategy inspire businesses to hire?

Without job creation the housing market cannot improve. The historically stable Springfield housing market is providing the proof with home sales slowing to a thirteen year low in spite of interest rates that are at record lows.

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.

Americans allowed the big government types in the Republican Party to add nearly five trillion dollars to the deficit during the eight years of W’s presidency. Bush failed to use his veto pen on the spend happy Rino’s because the tax cuts had the economy growing and averaged 5.2% unemployment over his eight years, increasing [...]

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