Fritz Pfister

The fourth quarter of 2009 was almost a record setter, tying 2005 which was the best year on record for home sales in the Springfield housing market. The 945 closed home sales were up 36.56% from the 692 in 2008. The 772 homes going under contract were up 9.19% from 707 in 2008. The median sale price of $107,500 was up 13.15% from $95,000 in 2008. All good news.

That was then, what about now? The good news is that the 243 new listings the first three weeks of 2010 are down 15.62% compared to last year. The 1413 homes listed for sale today stand 320 fewer than one year ago. People with their homes listed for sale have less competition for buyers.

The reason Springfield had a record fourth quarter was due in large part to the initial first time buyer tax credit that expired on November 30. That record consumed a lot of demand for homes. In spite of the government announcing on November 6 that the tax credit was being extended to April 30, and expanded to repeat home buyers, the bad news is the 132 homes going under contract in January are down 28.26% from 184 during the same time last year.

It seems the housing market is suffering what the car dealers experienced following the cash for clunkers tax credit. My concern now is for home owners that want to sell their home to qualify for the expanded $6,500 tax credit. How many can get sold, find another home, and enter into a valid contract by April 30? It will depend upon the leftover demand consisting of first time home buyers. How many remain in the market following the big surge in the fourth quarter is unknown.

What is known is the level of demand will be determined by jobs. I ended last weeks observations stating I hoped the economic news would be better this week. The news wasn’t better.

From reports this week in the SJR. Illinois unemployment is up to 11.1% having lost 237,000 jobs the past year. Manufacturing led the way with 71,000 lost jobs. Professional and business services lost 44,000 jobs. I’m not surprised. Back in 2005 there were 835 Realtors in the local MLS, today 585.

Nationally the unemployment rate stands at 10%, however doesn’t reflect the number of people who have quit looking for work. The federal government reported 600,000 Americans have given up looking for jobs in December, and 2 million the past six months. Forty three states reported higher unemployment rates. This is getting more serious by the day.

Last week first time claims for unemployment jumped unexpectedly by 36,000. Why unexpectedly? Four million people have lost their jobs since Obama entered office one year ago. Three point six million since the passage of the stimulus bill. Why has the stimulus failed to stimulate job growth?

Because it is a flawed economic policy based upon Keynesian theory that the government can stimulate the economy by spending money. For every dollar the government spends to stimulate, a dollar has been removed from the private sector that can’t be spent. The best analogy would be if you were to take a bucket, no matter the size, dip water out of one end of your pool, and then dump it into the other end of the pool, you will not affect the amount of water in the pool. You are merely redistributing the water.

Government stimulus spending is not creating jobs today, and worse yet, it is setting up more job losses in the future when the money must be paid back with interest removing more money from the private sector.

In other economic news the stock market fell 552 points by 5.2% the past three days after President Obama announced his plans to tax big banks and limit their size, another terrible economic policy. Bank stocks plummeted as a result. These banks now must operate on the defensive, which will lower the amount of money it will lend to small businesses, further driving up unemployment.

It should surprise no one that these economic policies do not work. Not one of the presidents cabinet appointees, or 90% of his jobs summit attendees have any experience in the private sector.

It is a time to change course and stop punishing the job creating private sector. The administration has demonized corporations, big oil, insurance companies, doctors, and now banks. These are the job creators, so this makes absolutely no economic sense if your goal is to create jobs.

Small business owners had a short reprieve from the governments onslaught when the voters of Massachusetts elected a Republican who campaigned against Obama Care. A Rassmussen poll this week show 61% of Americans oppose this health care reform bill that would raise taxes by hundreds of billions, and cut Medicare by hundreds of billions. Confidence in government fell when Americans were appalled at the process which was held in secret, and resorted to bribery to gain support.

This was short lived as Jim Manley spokesman for Harry Reid said Democrats will continue to press forward with the bill, and several congressmen report the nuclear option is back on the table in the senate that would only require 51 votes to pass this bill.

Confidence in government will take another big hit if the Democrats continue to press forward and force down the throats a bill 61% of Americans don’t want. If this bill is passed the economy will take a big hit, and unemployment will go higher.

The old Pogo cartoon said; “I have met the enemy, and he is me.” The American people have elected a president and representatives that are proving to be the enemy of capitalism, the economy, large and small business, and the unemployed.

If we continue down this anti-capitalist path there will be no hope for any sustainable economic recovery or meaningful job growth. This could prove to be a long year for home sellers. No jobs, means no buyers. The Springfield market will be reduced to trading spaces.

The solutions are obvious. Stop government deficit spending, lower business taxes, personal taxes, capital gain taxes, no more trillion dollar health care boondoggles, lighten regulatory burdens upon industry, and business.

I have zero confidence in the presidents economic agenda, but I have 100% confidence in the American worker, entrepreneur, and businessman. Get government off Americans backs and watch the economy rebound sharply in short order. Millions of Americans that are out of work depend upon it.

We’ve suffered enough pain from this anti capitalist, socialist experiment. Time to release the power of free market capitalism that gives Americans the highest standard of living in the world and that will put millions back to work.

If we continue to follow the administrations current economic policies, can you expect better results, with job growth and prosperity? The definition of insanity is doing the same thing over and over again expecting different results.

The opinions expressed here are solely those of Fritz Pfister, or identified sources,  and not those of RE/MAX Professionals Springfield, or RE/MAX International.