Weekly Observation for March 31, 2012; Springfield Housing Market, March in Like a Lion Out Like a Lion
March 31st, 2012March came in like a lion and is going out like a lion for the local housing market. Member brokers of The Capital Area Association of Realtors reported 121 sales pending this week. The most home listings going under contract in two years.
Due to the end of month closings yet to be reported, March sales figures will be interesting to watch. We continue to witness an anomaly, the number of listings going under contract continues running over 20% ahead of last years pace, yet closed sales are up by only 3.5%.
I have shared with you that the days of a 30 day closing are going the way of the dinosaur with the implementation of the Leviathan Dodd Frank law throwing a ten ton anvil onto the mortgage industry including appraisals. The question remains, is this new law simply delaying closings or is it killing sales? Probably a combo platter.
Here’s the anomaly. In the good old days before Dodd Frank a 30 day closing was typical. So one could extrapolate estimated closed sales for the upcoming month from the current months sales pending. Here’s the pattern in our housing market:
December 224 sales pending followed by 184 closed sales in January. Fairly typical. Then in January mild weather continued along with record low interest rates and there was a surge in sales pending, but not closings.
January 295 sales pending followed by only 176 closed sales in February. Odd. February sales pending 320 followed by only 216 closed sales reported as of the end of business Friday. We’ll have to wait and see how many sales are added. Enough I’m certain to exceed March 2011’s, 245 closed sales. At least I hope so.
This exemplifies the anomoly. In February of 2011 when we were buried under the Groundhog Day blizzard grinding the market to a snails pace, resulting in only 251 sales pending, we still managed 245 closed sales in March. This year? 320 sales pending in the balmy February has resulted in only 216 reported so far?
There have been 263 more sales pending December through February than there have been closings January through March. Confounds me, and nobody tracks the trends in our market closer than me. Nobody. This is more than a statistical anomaly, for eah of the 263 pendings not yet closed there are a buyer and a seller. This means the new Dodd Frank law is impacting the sale or purchase of a home for 526 local families in an yet unknown way. We shall see.
In fact the MLS is reporting 509 sales pending as of today, the most going back to this date since 2007. This is great news for home sellers, if they close. The short appraisal phenomena continues, with my best estimate, one in five sales is short appraising. Unless the seller accepts the lower appraisal, it’s back to the market and the sale fails.
No question this burst in sales activity is due to pent up demand following four pretty lousy years for home sales. Does anyone believe this could be caused by an influx of new jobs? Of course not, but that means when the pent up demand is satisfied, the market will once again be dependent upon jobs to add buyers.
We have had some good news on the jobs front, but I am only cautiously optimistic. The number of initial claims for unemployment this week was 359,000 with the four week moving average at 365,000 which normally indicates strong job creation.
Why the cautious optimism? The large number, 12.8 million out of work, with the majority not even counted in the unemployment rate. When these folks get actively searching for a job again and are counted the unemployment rate would be reported in double digits.
Had to laugh this week at an AP article in the SJR. From Wednesday’s edition in the Business section was this headline: “Americans Hold Onto Positive Economic Outlook.” I said really? What was the reasoning of the AP writer? From my column posted yesterday at TownHall.com:
What was the premise for the headline? Consumer confidence held nearly steady in March at 70.2 down from a revised 71.6 in February. A reading of 90 indicates a healthy economy, a reading of 100 indicates a growth economy.
The AP school of journalism must celebrate when their children bring home a ‘D’ on their report cards. Why look little Johnny got another ‘D’ the best grade in a year, and we can celebrate it’s not an ‘F’!
The reason we hear ad nausea why consumer confidence is so important? Confident consumers spend, and consumer spending accounts for 70% of economic activity. If the AP had any reporters with the curiosity of a three year old, wouldn’t they then question why rising gas, food, and energy prices aren’t harmful to consumer spending?
Nope, not this reporter who wrote;”Gas prices are up but so is the stock market. Home prices are down but so is unemployment.” I can hear the grill cooks at McDonald’s saying; ‘Hey Joe, sucks about these gas prices but my 401k is skyrocketing, it’s all good!”
Quoting an economist from the AP writer’s brilliant analysis; “The resilience suggests that jobs remain a more important concern for consumers than gas prices.” This too is simply brilliant. If you don’t have a job, you’re not worried about gas prices. [end quote]
Saying home prices may be down but so is unemployment as reason consumers are optimitic is flat misleading. Unemployment is down not due to job creation as much due to people no longer being counted. Don’t expect AP to ever tell you that, doesn’t fit their agenda.
It’s a mixed up jumbled up world of reporting out there. Stayed tuned here to learn the real world results in the Springfield Illinois housing market, and we can see if we can tell what is causing the increased activity in sales pending not being reflected in closed sales, and see if we can make sense from the media’s attempt at journalism.
Make this a great week from Fritz and Kristie Pfister and the Pfister Success Team Inc at RE/MAX Professionals of Springfield. Thinking of selling your home? We are in need of listings, having 27 of our listings either closed or under contract, our inventory is down to just 19 with systems set up to service 40. Give us a call at 217-652-7653. It would be an honor to be of service. Proven selling systems, uncomparable results. Call 652-SOLD.
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.
