Weekly Observation for April 21, 2012: Which Way Do We Go In The Springfield Housing Market?
April 21st, 2012Which way will the Springfield housing market go the rest of the year? What will happen to the momentum created by good weather, record low interest rates, and pent up demand? Will the activity besting last years silent spring continue through June as we could expect in a ‘normal’ market? What is the real condition of the economy? Locally, statewide, and nationally? Are consumer’s and businesses gaining confidence?
There’s a lot of questions for you. How they are answered will unfold over the coming months, however in today’s SJR we have huge headlines leading off the business section, Small Business Looking Up. Sounds good to me. Small businesses are the backbone of the economy and are the driver of job creation.
Looking at the fine print of the article one learns this is a story about a survey as part of the Capital Area Independent Business Alliance with a membership of 270. Of those about two dozen said there is a slight turnaround, things are picking up, it’s not a waterfall, it’s more of a trickle, so knock on wood, and there remains plenty of uncertainty especially with state government, and the presidential election. As one owner said, it’s a brutal arena out there. Guess all these sentiments add up to deserving the huge headline, or is it cheerleading by the paper?
Reported yesterday were home sales for March, however the focus was on buyers moving closer to town due to high gas prices. The story did report the 6.5% increase in home sales, which is good news, but neglected to mention that was compared to the slowest March for home sales in twelve years. Headed in the right direction, but like the small business owners, Realtors are knocking on wood too. They and the business owners know it’s about jobs adding customers for their business that will be needed to sustain this modest growth.
Yesterday I posted my weekly column at TownHall.com titled, Obama’s Trifecta Creams the Housing Market. In my opinion the Trifecta consists of debt, Obamacare, and threats of tax hikes which are the primary drivers of the uncertainty business owners are gripped in that has resulted in the worst jobs recovery following a recession dating to WWII.
How is the debt impacting job creation? President Obama who was to halve the deficit by his first term did the opposite by adding over $5 trillion to our debt in 39 months exceeding $15.6 trillion this week. That means the debt ceiling will need raised again this year from $16.4 trillion to nearly $20 trillion.
Business owners know that the piper will need paid some day. This means higher taxes for everyone, and they also know what the CBO reported yesterday, the debt is reducing GDP by one half to three and a half percent over the next five years depending upon interest rates. That’s a trillion to four trillion dollars of lost private sector money transferred to government to pay debt. This is about to go beyond uncertainty to fear for those who understand the gravity of the debt situation.
Obamacare, what can be added? Costs to hire an employee remain unknown, the over $600 billion in new taxes on businesses are beginning to kick in, and the constitutionality of this Leviathan law remains unknown adding to businesses uncertainty.
Of course the big news this week was that Republicans ostensibly blocked the Buffet Rule in the senate from their minority status. Then Obama continues his threat to raise taxes on millionaires for ‘fairness’, that millionaires want to pay more, and don’t need the money.
I’m fairly confident the small business owner fortunate enough to be making that million bucks may hold back on his expansion plans, like hiring more people, until it is known whether they will be the target of all out class warfare, wealth redistribution fairness, and tax hikes in 2013.
Adding to the tax uncertainty are the Bush Tax cuts Obama extended for only two years which has the hour glass running out on December 31. Businesses know that the president wants the upper bracket taxes increased. Creating more uncertainty.
Regardless the Obama Trifecta; debt, Obamacare, and the threat of higher taxes are the root cause of business uncertainty that is the biggest impediment to hiring today. Yogi Berra said about baseball, 90% of this game is 100% mental. The same can be said for the Obama Trifecta; 90% of the jobless recovery is 100% Obama. Until this uncertainty is removed one way or another there won’t be any significant job creation.
Just as the headlines regarding small business doesn’t jive with the story so were the reports on unemployment this week. The state of Illinois reported unemployment fell to 8.8%, the best since 2009. But is that a number that is reliable? Was that the result of job creation or more people no longer being counted?
Then there’s the initial claims for unemployment touted as falling this week by 2,000 to 386,000. Once again the game is played by the BLS. The truth is it was a decrease from the previous weeks adjusted number after being increased by 8,000 to 388,000.
Regardless the jobs market is languishing again. Until there is certainty businesses can’t budget and won’t hire in earnest. For now it’s as good as it gets nationally.
Locally we had a ray of sunshine with Schnucks announcing the building of two new stores. This will lead to jobs we desperately need. Between HyVee, County Market, and Schnucks we will see much needed construction jobs too. Add in the medical community and we may see a modest increase in jobs locally.
In my opinion home owners who want to sell better do it now while we still have pent up demand driving sales. Nobody knows when that demand will be satisfied, however it’s looking like the first half of 2012 will offer the best chance to sell a home.
That’s my prediction. The only thing I can see that could change that prediction would be as we approach the election that businesses would see the defeat of Obama as imminent, along with the anti-business agenda that has prevented a jobs recovery. The prospects for the jobs market would improve immediately, along with the housing market.
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.
