Fritz Pfister

This past week my family traveled over the river and through the woods to Grandmothers house in Ohio. Taking a week off following a long winter working in the real estate business was a welcome break. Catching up on the local news it was also a welcome break to read from Friday’s SJR that the president is encouraging people to buy homes. Amen to that.

I have stated here repeatedly that the housing market was the fuse that ignited the financial crisis, and that it would be housing that ends the financial crisis. Housing simply accounts for too many jobs not to be the catalyst to recovery.

The Federal Reserve has done its share by infusing over a trillion dollars into treasuries that has resulted in the lowest interest rates on record. The stimulus bill included an up to $8,000 tax credit for first time home buyers. Home prices nationally have fallen drastically as the result of record numbers of foreclosed properties being liquidated. What a combination; the cheapest mortgage money on record, the lowest home prices in years, and tax incentives to buy a home.

One would think that home sales would be off to the races, but they’re not. It’s more like a slow walk up the hill to recovery. Why? A nervous consumer watches as unemployment rises to a 25 year high. The very real threats of rising taxes, and inflation caused by historic government deficit spending doesn’t inspire confidence. The uncertainty about the results this massive spending will produce, and who is going to pay the tab, has helped drive consumer confidence to record lows.

When consumers are worried about their job security, about more of their earnings being taxed, and the potential for inflation to devalue everything they own and cause everything they buy to go up in price, consumers pull back. A consumer that is pulling back on spending waiting to see how things will turn out, doesn’t rush out to make major purchases. Hence the president encouraging people to buy houses. He’s right, people should be buying houses, however at this point, I don’t know what impact his suggestion will have.

If the rest of the nation is taking a slow walk up the hill to recovery, our local housing market is on a brisk walk. March home sales were up by 34 from 254 in 2008 to 288 this year, a 13.4% increase. The median sale price was up $10,000 in March to $115,750, a 9.4% increase. However to keep the March increase in the number of home sales in perspective, there were 135 fewer homes sold this March than from the record 423 home sales in March of 2006, 31% fewer. We’re heading in the right direction but we’re not home free.

The first quarter ended down by 22 home sales to 648 from 670 in 2008, or by only 3.2%, however a far cry from the 891 during the record first quarter just three years ago, down by 243 home sales or 27% fewer. This hopefully marks the bottom with the fewest home sales in the first quarter since 2000. The next few weeks will tell us which direction the housing market is headed as we watch for the number of home listings going under contract. Today there are 41 fewer under contract than on this date last year, so we have some catching up to do.

The ingredients are there to cook up a nice jump in home sales; interest rates, prices, and tax incentives, not to mention the 1691 homes listed for sale today making for a great selection. As the president said, now is the time to be buying a home.

If you are wanting to sell your home this year you can learn the actions to take during these uncertain economic times. I will be hosting a free no obligation home seller seminar Thursday April 16, from 6pm to 9pm at the CAAR building at 3149 Robbins Rd. Springfield. You can be prepared regardless of which direction the housing market takes. Call 652-7653 to reserve your seat today.

From the Pfister family and The Pfister Success Team of RE/MAX Professionals, have a safe, happy, and blessed Easter.

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