Fritz Pfister

Harry Truman said there’s no such thing as the future, only history that hasn’t happened yet. Old Harry was right. Nobody can predict the future, however past performance is about as good an indicator as you get.

Like many housing markets across the United States Springfield has changed since the financial meltdown in 2008. The massive loss of jobs has taken its toll, however a massive loss of confidence is preventing a rebound in the economy that would return a good portion of those lost jobs. Jobs are the key to a rebound in home sales.

The spring market in Springfield is historically the most active of the year. This being my 25th March as a full time Realtor I can attest that the love affair with housing usually begins on Valentines Day. Not so in 2011. Following a big first half in 2010 the market has stumbled along since the end of the government bribery to buy a home in the form of tax credits. Amazing how incentives cause people to react.

A little history. With easy credit and Fannie/Freddie run amok at the orders to make loans affordable, Springfield responded with the most home sales annually in history from 2003 through 2007. After averaging 4055 home sales during that stretch, the past three years averaged 3548.

Last year was the telling tale, the fewest home sales in the Capital Area Association of Realtors MIS since 1999. How could this historically stable, steady Eddie, market have so few home sales when interest rates were the lowest in over 50 years and the government was paying you to buy a home? Jobs. More specifically the lack of jobs, and the lack of confidence.

Following a sizzling first half influenced by tax credits home sales crashed by 32 % in the third quarter, and limped home to finish the year in disappointing fashion. The start to 2011 has not broken free of that malaise.

Just three weeks ago The SJR was reporting the celebration of a 4.7% increase in year over year sales in January. A whole whopping twelve more sales. What they will report in a few weeks is that February finished with the fewest home sales since 1997, down 24.31%. Fifty-three fewer sales than last February more than erases January’s increase of 12. Through the first two business weeks of March closed sales are down 25%, and sales pending are down 18%.

Believe it or not that is an improvement that marks the beginning of the Springfield Illinois spring housing market. Albeit three weeks overdue. The question becomes; how strong and for how long? That will be determined by new jobs and confidence.

What about jobs? The SJR reported on March 6 that the total work force in December of 2010 was down 800 from December of 2009. Then big headlines March 11; 1,300 jobs added in a year. The unemployment rate however jumped to 8% in January. Confusing? It’s all in how you decide to report. This tells me that job growth is weak. If not for the 1300 new jobs we would have had the workforce decrease by 2100 instead of the 800 in 2010. In other words we’re still in the red.

What about confidence? You hear all about the trillions of dollars banks and businesses are sitting on without investing or hiring. What could cause that hold back? Government.

On the federal level ObamaCare has businesses in limbo. They don’t know if it is Constitutional, if it will ultimately be implemented, and if so they don’t know what the cost per employee will be. Energy policy driving up the price of gas could cause a pull back in recent consumer spending gains meaning less demand for their products or services. The back door implementation of Cap and Trade through the EPA will raise the costs to heat and cool homes, businesses, and increase the price of gas with the burden placed upon refineries, and power plants passing along costs to consumers.

I know the president effectively said his energy policies have increased production and lowered our use of imported oil to below 50%. Both of which are easily proven to be slight of hand and word. Dave Sykuta of the Illinois Petroleum Council says the increased production is from policies implemented during the Bush administration, that Obama has rescinded. Those policy changes won’t show up in the production numbers until later.

The Energy Information Agency reports that production in the Gulf of Mexico will fall by 15% this year, and by 26% in 2012 from the high in 2010. The Gulf produces 30% of our domestic oil supply. The American Petroleum Institute says the most recent numbers are from January and 61.7% of oil used domestically was imported. The president is selling, the facts disproving, and the people won’t be buying the fable.

The Consumer Sentiment index the precursor to Consumer Confidence fell to 68.2 in March down from 77.5 in February. $3.50 and rising gas prices and skyrocketing food prices will do that to confidence. And if you live in Illinois the 67% income tax increase is coming out of paychecks now and is being noticed, with reports the Illinois budget is in worse shape in spite of the $6.8 billion heist of the people’s money transferred to a dysfunctional governor and government.

With weak jobs, and faltering confidence it is hard to gauge how strong, and how long the spring market will be in Springfield Illinois this year. The saving grace is consumer fear that interest will have to go up at some point, and will enter the market to purchase a home while the money is still cheap.

Besides many folks have the intuition that things aren’t going well and better to lock in a low cost for thier housing costs going forward than risk rising rents. Polls indicate 67% of Americans think the country is headed in the wrong direction. They should live in Illinois!

I’ll keep you posted on the progress of our housing market. My one bit of advice for home sellers would be the next ninety days will be your best chance in 2011 to sell, from what we call the spring housing market. This isn’t your typical spring market, but it’s the only one we got!

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.

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