Fritz Pfister

Oh the wonders of incentives. The way people react to incentives. The tax credit deadline to have a home under contract has come and gone. The result? The Capital Area Association of Realtors member brokers reported through the end of business on Friday April 30th the following:

Closed home sales in April of 367 up 28.51% from April ‘09 with more yet to be reported. Pending listings including pending continue to show, 639 up 50.7% from April ‘09. Median sale price $108,500 up 3.33% from April ‘09.

The preliminary report for the first four months of 2010 compared to 2009 are as follows:

New listings of 2062 up 21%. Closed listings of 1060 up 13.24%. Pending listings including pending continue to show 1780 up 23.26%. The median sale price dead even at $105,000.

Now back to reality, a market left to its own devices without the artificial influence of tax incentives that all tax payers now get to repay with interest. All you folks that qualified and purchased a home who will receive the tax credit should thank everyone you know that pays taxes.

A word of caution, if you write a contract today, or did not conclude successful contract negotiations by midnight last night, don’t claim the tax credit. That would be tax fraud punishable by fines and prison. A CPA who shall remain anonymous said in the current IRS training, everyone who claims the tax credit will be audited to verify they qualified. So be ready to prove where you were, when you were there, your income, your home ownership status for the past three years, and that the seller was not related.

With the law allowing those who qualify to have until June 30 to close upon their purchase, look for closed home sales to be up year over year in May, and possibly in June. Then it will get interesting. We will monitor the sales pending activity in May to see how it compares to last May. Those pending sales will be the tea leaves forecasting future home sales.

There has been some positive news within the economy. The first quarter GDP was up, consumer spending was up, the number of first time unemployment claims fell 11,000 to 450,000 last week for the second consecutive weekly decline.

Yet no major economist is willing to declare the recession over, why? Debt, deficit spending, massive new government programs like Obamacare, business crushing rules and regulations coming from EPA, and the knowledge that weekly unemployment claims need to be at 350,000 a week or below to signal job creation. We would need to create 200,000 jobs a month for 40 consecutive months just to return to the number of jobs there were in 2007.

Here’s my take why economists are not declaring the recession over, although the recession is over for Wall Street, it is not for Main Street. The reason is consumer confidence. From the SJR Business section Wednesday April 28th headlines; Consumer confidence grows with the economy. Remember last weeks observations, things are not what they appear?

The Consumer Confidence Index rose in April to 57.9, that’s up from a revised 52.3 in March, but is well below the 90 that is considered healthy. That’s like having a headline saying; Cubs score 10 runs in game for first time this season. In the fine print it is reported that the other team scored 20. In other words folks don’t have any confidence, and that is not a good indicator of where our economy is headed.

Let me share a true story related to me from a local small business owner about one of our senators visiting their business recently. Senator asks/states; I’ll bet your business is good? Business owner, not really. Senator; why? Business owner; Nobody’s buying like they used to, they don’t have confidence, and are worried about jobs, and costs like health care on down the road. Senator; that’s a good health care bill, I voted for it, and in a couple years your business will receive tax credits to pay for your insurance. Business owner; tax credits to me don’t bring customers through the doors.

This made me think about the recent red hot market as people responded to the tax incentives to buy a home. The original Stimulus Bill was $787 billion but has grown to $862 billion because congress keeps adding on unemployment benefits for life. By any objective measure the Stimulus is one big political boondoggle our children will get to pay back while failing miserably to create jobs as promised.

It hasn’t stimulated anything but political favors to the loyal. Please don’t tell me the $8 to $12 a week tax cut to workers stimulated the economy, that insults any one’s intelligence.

I just wonder what would have happened if that original $787 billion was used to permanently lower tax rates across the board for every family and business in the country? The tax credit proves that if you give people money they will spend it. And instead of offering other peoples money to buy a home, if everyone had more of their own money, and didn’t have the threat of higher taxes coming at them like a rabid dog, this economy could be recovered by now.

Picture a man with his chest touching the ground in push up position. The Obama legislation, regulations, and taxation are all weights placed upon that man’s back. That man is the small business owner in America today. The small business owner’s livelihood is under attack by government. The crony capitalists on Wall Street are posting record profits because of their unholy alliance with big government. Yet the small business owner continues to struggle causing millions to go without jobs as their families suffer. That’s why consumer confidence is so low.

In a Rassmussen poll this week 34% believe government spending will create jobs compared to 66% who believe tax cuts will lead to more jobs. I would agree with the 66% because that is what history has proven.

Regrettably the Obama administration continues to deficit spend holding out hope more spending will lead to job creation. Ironically as Obama spends more than any president in history, he forms a panel to find a solution to his deficit spending. People are smart enough to know you can’t spend like this without massive tax increases coming their way. With people’s jobs and money in jeopardy, it’s no wonder consumer’s don’t have confidence.

Going forward this housing market’s performance will be determined by jobs, and consumer confidence. That’s the reality, that’s the truth. That doesn’t provide a lot of hope that will change in the foreseeable future. Maybe I am wrong, but the facts don’t bear that out.

A red hot Springfield housing market may just turn lukewarm before cooling off. Springfield’s housing market seldom gets cold, however if the government continues piling on taxes and regulations upon small business owners, it could get cold for the first time since the 1980’s.

If you want to sell a home the challenge to succeed just went up. Register for the free Home Seller Seminar to be held Thursday May 20, at 6:00 pm at The Hilton Garden Inn. Those with reservations are guaranteed seating and printed materials. The seminar is free and without obligation. The advice you will receive has helped more home sellers get sold this decade than any other. Call 652-7653 or e-mail fritz@springfieldhome.com.

Make this a great week from Fritz and Kristie Pfister and The Pfister Success Team Inc. at RE/MAX Professionals of Springfield. It would be an honor to serve you. Call us at 652-7653.

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.