Fritz Pfister

Now that the dust is settling following the historic midterm elections of 2010, what can home owners, home sellers, and home buyers expect going forward?

You can go to my weekly observations to see the well documented decline in Springfield area home sales following the expiration of the effective yet non-productive tax credits for home buyers. Year over year the second half of 2010 to date have home sales down by 29%. We have entered a new norm with the trend indicating home sales at 65% to 75% of normal Springfield levels.

What can change that trend, either up or down? Government actions or reactions to the hyper-liberal Obamacare and FinReg bills passed during Obama’s first two years. One also must factor in the heavy handed over-regulation regarding building standards and lead paint remodeling rules from the federal EPA.

A distinct reversal of power from what had been local government’s rights to regulate zoning, and building codes. But such is the world of the left, a centralized authoritarian government. One roundly rejected in the midterms.

The evidence couldn’t be more clear regarding home sales. If sales can decline in one of the nations bellwether housing markets with interest rates hovering around 4%, sales are weak due to a lack of jobs.

Why aren’t businesses hiring? Why is this the longest period of 9.5% or higher unemployment since the Great Depression? Why aren’t banks loaning money when they have $1.5 trillion in reserves gifted to them by the Federal Reserve? Because the Obama economic strategy is anti-business causing unemployment.

The Stimulus passed in February of 2009 failed to produce the jobs necessary to jump start the economy. Primarily because only 8% was spent on shovel ready infrastructure. This is to Obama what WMD’s were to George Bush. There was no there, there. Hundreds of billions were added to the deficit spent mostly on retaining state government SEIU, AFSME jobs, albeit temporarily and with a debt hangover.

The Obama fix all Keynesian spending failed as it did for FDR resulting in near record low consumer and business confidence. When your panacea fails the folks go, ought oh. In today’s SJR the AP shares that consumers have changed their spending habits, perhaps permanently. You know, the portion of the equation that accounts for 70% of economic activity. Thus the spiral began. No spending, no demand, no production necessary. Down we went.

Then Obamacare passed in the most unseemly manner proved to be full of false predictions as was the Stimulus. The rest of Obamacare strikes at the very heart of the relationship between government and the governed. Obamacare not only proves to be driving up the costs of insurance, causing further consumer spending pull back, it is destroying the best health care system in the world. A primary reason Democrats were rejected by voters.

The only way Obamacare can help the economy is to go away. That is not a realistic expectation, however it can be contained by the house defunding the program until the 2012 elections. It would be wise if the house began hearings to force the bureaucrats to tell the American people why each piece of the law was written, and to justify their claims during passage. This will undermine support for Obamacare when citizens learn the truth about what’s in this bill. The one nobody read before passage.

The Financial Regulation bill is the cousin to Obamacare, was written by the big banks who were just granted hunting licenses with small, and community banks as the game. Hearings should be held so citizens will learn the truth about how invasive the powers of the federal government will become. Every financial transaction you make is open to government scrutiny. The Democrats claimed this extra-constitutional authority allows them to track every citizen’s spending habits so they can prevent the next meltdown. Exactly how?

There’s the answer to why businesses aren’t hiring, banks aren’t loaning, why consumers aren’t spending, and why we have protracted high unemployment. Obamacare and FinReg are devastating the private sector with uncertainty. While bureaucrats continue to write thousands of pages of rules to enforce these super-sized pieces of legislation, not one single business in America can determine their costs going forward.

Until these counter productive laws are repealed and replaced the jobs market will not recover. That means our new norm in the local housing market is here to stay for the foreseeable future.

But it gets even better due to government. Ben Bernanke just played craps with the value of the dollar, and inflation. After increasing the money supply by 300% since September of 2008, that’s where the $1.5 trillion sitting on the sidelines emanated, Bernanke will print $600 billion out of thin air to buy U.S. debt.

What does this mean to home owners, home sellers, and home buyers in the Springfield market? If and when the destructive Obamacare and FinReglaws are tossed and businesses begin to expand, so will inflation due to a declining dollar.

In an AP survey of the nation’s top economists half agreed that Bernanke’s quantitative easing would lower interest rates causing consumers to spend more, banks to lend more, and business to hire. The other half said lowering interest rates below already super low rates will have little impact and plant the seeds of inflation.

Just when local homeowners see an economic rebound because this economy is ready, able, and willing to catch fire after an extended period of smoldering, inflation combined with double digit interest rates will put out the fire.

That’s just on the federal side of the economic equation. On the state side Quinn promises to raise taxes, and he won the election. This was tried in New York, New Jersey, Maryland, and California and the results were disastrous when tax revenues fell due to out migration. Those who stayed had a higher cost of living, less disposable income, and drove down consumer spending. Why should we expect different results in Illinois? You know this cycle by now. Down we go. Consumers vote with their dollars too.

The post election future for the Springfield Illinois housing market? You’re standing in it.

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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