Fritz Pfister

The official news is about to be reported by The Capital Area Association of Realtors member brokers. Closed home sales up over 36% in April 2010 over April 2009, 392 to 287. A new record for homes going under contract in April up over 50%, 639 to 434. Good times in the Springfield Illinois housing market. Thanks to record low interest rates, and tax incentives from Uncle Sam to buy a home.

Now the rest of the story you will only receive here and on Let’s Talk Real Estate streaming live on WMAY.com Saturday’s ten to noon central time, or on AM970 WMAY.

The first three weeks of May 2010 compared to the first three weeks of May 2009 home listings going under contract down by 84 or by 26.5% to 232 from 316.

The first three weeks of May 2010 without  tax incentives compared to the first three weeks of April 2010 the last month with tax incentives, down 169 or by 42% to 232 from 401.

Comparing the upcoming week to the final week of April when people rushed for their last chance to qualify for the tax credits will be interesting. The last week of April there were 238 sales pending reported. This past week there were 62. A bit of a change in activity I would say.

What’s the point? While the masses of Springfield area residents read and hear about how great the market is, only you who visit SpringfieldHome.com and listen to Let’s Talk Real Estate are receiving the real time status of the market. Who do you think has a better chance of getting their home sold; seller’s acting upon old news, or sellers acting upon real time information?

What a mixed bag of economic news again this week. Reportedly based upon fears of financial collapse in Europe the stock market made what is referred to as a correction, that is a 10% drop in value. Great news for the real estate market. Why? Just as with fat finger punching a billion instead of a million on a sell order the week before last causing a 1000 point drop in 15 minutes, institutional investors moved their money to the bond market driving down interest rates.

Record low interest rates are the silver lining in the cloud of economic news this week for the housing market. The jobs reports, and foreclosure reports were the dark cloud.

The news on foreclosures was down right ugly, a new record high 4.8% of mortgages are in foreclosure and a new record 10% of mortgages were in arrears. How many are in the local market is unknown, however nationally foreclosures will increase the inventory of homes for sale, and drag down prices.

In what appeared to be better news the Fed said they foresee a slightly better 2010 economy. The Fed revised upward forecasted growth to between 3.2% and 3.7% from 2.8 to 3.5%. It only appears to be good news because that is anemic compared to recoveries from all previous recessions. If we are in fact in a recovery. The Fed forecasts unemployment to finish the year between 9.1 and 9.5%.

Jobs, jobs, jobs. There is no recovery until we start growing the number of jobs. The foreclosure increases are now due to people losing their jobs more so than to people who got loans they couldn’t afford. As Mr. Brinkman President of The Mortgage Bankers Association said; people make house payments with paychecks not increases in the GDP.

From the Bureau of Labor Statistics this week;

In the week ending May 15, the advance figure for seasonally adjusted initial claims was 471,000, an increase of 25,000 from the previous week’s revised figure of 446,000. The 4-week moving average was 453,500, an increase of 3,000 from the previous week’s unrevised average of 450,500.

Some recovery 15 months after that end all, save all Stimulus bill passed, eh?

That brings us back to what will drive the Springfield housing market for the remainder of the year. Interest rates and jobs. A record number of buyers in April either closed on the purchase of their new home (392) or went under contract to purchase a home (639) for a total of 1031 home buyers removed from the market. Those 639 will be closing out in May and June so they can qualify for their tax credit.

Without question the tax incentives drove demand up to April 30th. Thank God the interest rates have fallen again. But if we are not creating any entry level jobs, or many jobs of any kind for that matter, how will we replenish the buyer pool? We won’t. Demand will be soft.

So while the uninformed are rejoicing in old news about how great the market is, the informed consumer that must sell their home is aware that if they get an offer, they better do their best to put it together, because the opportunities to get your home sold are going to get fewer and farther between.

Is this a bad real estate market now? No, we’re just going through our correction as did the stock market. There really is no such thing as a good or bad real estate market. There simply is a real estate market, and depending upon the time and place, it is either good for the buyer, or good for the seller. Today it’s good for the buyer. If the current trends continue it’s going to get great for the buyer.

What is good or bad about the housing market is the relationship to the overall economy. When housing sales are slow it’s bad for the economy. One in four jobs are tied to housing.

In other news this week I just had to laugh. In the SJR Business section from Tuesday was the headline; U.S. home builder sentiment index jumps. The first paragraph says builders are expecting improved sales in coming months despite the end of tax credits. The next paragraph says the NAHB housing market index jumped 3 points to 22. Then said a reading below 50 indicates negative sentiment about the market, and hasn’t been above 50 since April of 2006.

Just makes you want to laugh. Good news eh? Home builders sentiment has jumped from depressing to disappointing.

About like what I reported here last week when the president of the local association of Realtors said they expected momentum in the market to carry on through the remainder of the year in spite of expired tax credits due to sound market fundamentals. Don’t look now prez, but our mo is dropping like a hot potato in May.

It’s ok to put forth a positive view to the consumers It’s great to be positive. But the paper and association president should understand people are smart enough to know when you’re polishing a turd.

Make it a Great week from Fritz and Kristie Pfister and The Pfister Success Team at RE/MAX Professionals of Springfield. No matter the condition of the market we can help you get your home sold. Call us at 652-7653.

On a side note this week I would like to congratulate all my fellow Realtors at RE/MAX Professionals of Springfield and to Al and Linda Young owners. Real Trends magazine released their Power Broker report for 2009.

For single office real estate brokerages in the entire United States in closed transactions RE/MAX Professionals of Springfield number 8 in the nation, for RE/Max Franchises number 4 in the nation! No matter what happens in the economy you have a national leader at your service. When the going gets tough, go with the best, RE/MAX Professionals of Springfield.

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