Weekly Observation for December 10, 2011: Slow But Steady in The Springfield Illinois Housing Market To End 2011
December 10th, 2011Here’s the final numbers for November 2011 compared to November 2010 as reported by member brokers to The Capital Area Association of Realtors MIS. Closed home sales 238 up 3.47%. Home listings going under contract 283 down 1.73%. It appears the market is leveling off following the turbulent years since we were in the midst of the financial meltdown and housing collapse of 2008.
The dust is finally settling with home sales running between 20% and 25% below sales from 2003 through 2007 when local brokers closed an average of around 4100 home sales a year. Looks like we’re on pace to close slightly more than 3200 this year, and when excluding the Jacksonville sales who joined the association in 2005, and the Taylorville sales who joined in 2000, our market will have the fewest home sales since 1998.
This during a year when interest rates fell to the lowest levels on record. The inventory of homes for sale is the highest in three years, however well below the glut of homes for sale in 2007, and 2008. With an adequate inventory of homes for sale combined with record low interest rates, the drop in home sales can be attributed to two things, jobs and consumer confidence.
We had good news this week in both jobs and confidence, however we are nowhere near time to celebrate because the jobs numbers on initial claims for unemployment are tempered by the persistently high unemployment rate, and the fewest number of jobs in America since 1983. The confidence level has risen four straight months however remains well below levels that indicate a confident consumer.
The housing market going forward will be dependent upon jobs and confidence. How the housing market performs will be dependent upon job creation and higher consumer confidence adding buyers to the market before interest rates increase. Rates cannot remain at record lows indefinitely. If rates go up before significant job growth and confidence increases, then Katy bar the door.
Three years ago America was celebrating the election of Barack Obama with a hopeful people that a new president with super majorities in congress would lead the nation to an economic recovery. At the time I was hopeful that the proposed plans would succeed, but was highly doubtful, sharing with you that we were being taken into uncharted waters. We would have to wait and see the results.
After President Obama was sworn in his plans became more clear as he was all in with government spending as the solution to economic recovery. The Stimulus failed to meet any of the projections from the administration. Now three years later the economy is stagnant, we have more people in poverty and on welfare in history while growth is flat to anemic. That doesn’t bode well for jobs and confidence increasing before interest rates go up.
Following all the bail outs, $4 trillion in added debt, energy policy that has driven up the price of gas, and food, persistently high unemployment, massive new laws like Obamacare, Dodd Frank, and EPA industry stifling regulations, the big government central planning has failed to produce the necessary economic growth to put Americans back to work and buying homes.
This week in Osawatomie Kansas the president doubled down on his agenda, saying limited government and free markets don’t work, and never have worked. Obama again laid out his appeal to raise taxes on the rich, for more regulation, and for bigger government. As Charles Krauthammer stated, Obama channeled not Roosevelt but Chavez, and Henniger with the WSJ said this was a speech you would expect to hear in Caracas. This is not good news for a nation desperate for hope of an improving economy.
A CBS News Poll released yesterday shows that 41% of Americans think the president has done a good enough job to be reelected while 54% don’t think so. Only 33% approve of how he has handled the economy while 60% disapprove. This limits any hope that confidence will rise to needed levels before interest rates increase.
For months I have shared with you the economy could not improve with these policies in place. Policies need to change if we were to have a chance at economic growth beyond the current anemic pace. With President Obama announcing from Kansas he isn’t changing his agenda, he is choosing the same policies that have European economies collapsing.
Based upon President Obama’s refusal to change we cannot expect any significant improvement in jobs or confidence. That is the reason Springfield home sellers can expect slow but steady sales. There can be no improvement that will amount to much with these headwinds coming from Washington D.C., not to mention the state government gale force headwinds already depressing the Illinois economy.
There are encouraging signs in the local housing market and hopefully government doesn’t tamp those down. Steady median sale price, reasonable level of inventory for sale, and record low interest rates. The challenge for sellers are less than half of home listings have sold this year, with the slowest pace for home sales since 1998. Translation, weak demand, steady but weak.
Going forward with more of the same as being announced by the president this week, it looks as if demand will continue to be weak through the election. If people decide they like the results of the current economic policy and President Obama is reelected, then we are probably experiencing the best housing market we will see in the next five years, because if the only change we see are rising interest rates, then the hand writing is on the wall.
Welcome to Springfield Illinois where we are back to the future. Due to the economy we are living 1998 all over again.
The good news for home sellers was in 1998, the first of seven years I was honored to be the top agent at RE/MAX Professionals, I closed 41 residential transactions. While the MLS has reverted back to the same level of sales in 1998, my team will more than double our 1998 production.
We are looking to start the first quarter of 2012 with forty families to serve in the sale of a home, we have openings for about twenty-two more families. Now is the the time to plan. Call us at 217-652-7653 to schedule a time to meet and prepare a plan so you will end up in the 48% of home sellers who get sold, and not the 52% that don’t sell. Call us 217-652-7653.
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.
