Weekly Observation for May 5, 2012: Home Sales Springfield IL April, Getting Better
May 5th, 2012The final numbers are due to The Capital Area Association of Realtors MLS by member brokers on Monday. These numbers may change, but only slightly. Here are the home sales figures for April 2012 compared to April 2011.
New listings 500 up 3.09%. Closed home sales 310 up11.11%. Sales pending 453 up 6.33%. Median sale price $110,000 up 4.76%. All in positive territory which is good news.
However when comparing to the five year average between 2007-2011 the number of closed sales are down 24 by 7.2%, and sales pending are down 42 by 8.5%. Although we are improving we haven’t quite made it back to average.
The anomaly for 2012 continues with year to date sales pending up 241 by 17.94% but has only translated into 54 additional closed sales or up by only 5.97%. There are multiple reasons, however having the most impact is the new Dodd Frank financial reform law slowing the closing process with lenders and appraisers.
Another trend is developing, and it is a noticeable slowdown in the rate of increase in sales pending. As suggested here, it appears the mild weather over the winter robbed sales from the spring. Here are the rates of increase in sales pending through the first four months; January up 21.9%, February up 27.49%, March up 18.47%, and April up 6.33%.
This indicates the market may be headed back to the same level of sales as 2011, the slowest since 1998. In my opinion the increased demand for homes has been driven by pent up demand as people take advantage of historically cheap interest rates, reported to have set a new record low last week. This may keep sales momentum in tact in May, however the question will be; for how much longer?
Once pent up demand is satisfied the housing market will become dependent upon jobs adding buyers to demand. If as reported here last week that Springfield was running opposite the nation in home sales again, we can only be hopeful the same will be true for jobs.
Nationally the jobs market is retreating. Although the unemployment rate dipped from 8.2% to 8.1% that was not due to more people finding work, it was due to hundreds of thousands giving up looking and no longer being counted.
This past week Britain and Spain both officially entered double dip recessions with Greece, Italy, and Ireland struggling as well. This may help explain a weakening in U.S. manufacturing, Europe accounts for 19% to 25% of our annual exports.
There were mixed reports on manufacturing this week. The Chicago region reported the biggest decline since 2009, and Dallas went negative for the first time this year while the Institute for Supply Management reported an increase in activity to 54.8, which was followed the next day by a report that factory orders fell to a three year low.
Since Springfield is not manufacturing dependent we may escape and run opposite the nation on jobs. If not the slowing trend for homes going under contract will continue.
Then there’s the good news bad news for consumers. Spending increased at a slower pace but wages remained anemic. The increased spending came at a cost to personal savings.
Falling oil prices is good news, but are falling due to a lack of demand as Europe teeters on recession and the U.S. economy is slowing and stagnate.
Although initial claims for unemployment declined 27,000 this past week, the four week moving average increased to 383,500 headed back toward the 400,000 mark that indicates no job growth.
In Illinois the austerity axe has had to come out, reality has checked in, and people don’t like it from retirees who are threatened to lose health care benefits to day care providers. Problem is quite simple. It is not that Illinois is broke, it is Illinois has made promises it cannot keep, and has spent far more than it takes in. The final budget will have an impact on the Springfield housing market.
It’s a different story in D.C. Of course the politicians in both parties point the fingers of blame but that doesn’t produce a solution. The president is wanting another $500 billion stimulus package in the form of an infrastructure bill, and the Republicans oppose going deeper into debt to fund it. After all we have spent over $5 trillion more than we’ve taken in the past three plus years without the economy growing as predicted. If spending didn’t work before, why will it work now?
Since it is an election year don’t expect any solutions to move forward. In fact the solutions to the worst recovery following all seven recessions since the Depression won’t be determined until the election. Voters will choose between more government spending, more debt, and higher taxes as the solution, or cutting spending, reducing debt, and keeping taxes where they are, as the solution.
Until then expect gridlock in D.C. which means a slowing economy as businesses struggle to hire due to uncertainty. The ruling on Obamacare this summer may help some, because the costs for business remains unknown. If upheld as Constitutional each employee will cost an average of $3,000 more, but at least there would be some certainty.
The outcome of the expiring Bush tax cuts will impact every American, and if allowed to expire will become the biggest tax increase in history, including $300 billion a year on the middle class. If people aren’t nervous about their taxes going up they should be.
The uncertainty regarding Obamacare and taxes doesn’t look good for job creation on the national scene. Here in the state a lot will be determined by the final budget package. Will serious cuts finally be made, or will the can get kicked down the road leading to credit agencies downgrading Illinois to junk status?
Regardless, Springfield historically runs opposite the nation, we’re holding our own, April sales were up, although still below average. That my friends is a lot better than most places around this state and nation. We should be counting our blessings.
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.
