Fritz Pfister

What a week. Do you remember the famous line from Hogan’s Heroes? Interesting Klink, verrrry interesting. That pretty much sums up the past week.

The Greater Springfield Area Chamber of Commerce held its annual business connections this past Thursday. They held, for the first time, a speed networking session in which I participated. It was a worthwhile adventure. I wish there was a way I could properly convey the positive attitude of the business folks to the consumer folks. Let me just say the vast majority of business owners are extremely upbeat about the local economy.

I shared with folks the great news that the local housing market appears to be heading back to our normal state of affairs. How do I know this? The preceding week the national media was giddy with stories about how existing home sales rose across the nation by 5.4% in February; locally we were down 18.2%.

Then Wednesday the national media reported that home prices sank by the sharpest annual rate on record. The Standard and Poor’s/Case Shiller index of home prices in 20 major cities fell by 19% in January from January of 2008. Good thing we don’t live in a major city. Prices in the local market have rebounded and were up 6.5% in the first quarter. Take that big cities!

Great news, preliminary figures for March home sales locally were up 12.6% from March of 2008. The burst of activity that began in mid February saved the first quarter of the year with home sales down by only a meager 3.5% from the first quarter of 2008.

If, when the sales numbers are released in three weeks for home sales nationally for March, and they are down, that will be more proof we may be heading back to normal. Why? Historically the Springfield housing market runs the opposite of the nation.

In my fearless predictions in December, my forecast was for 590 home sales locally in the first quarter, we finished with 646. What made the difference from finishing at 590? Two primary reasons, the lowest interest rates on record, and the first time home buyer credit of up to $8,000.

There’s little question in my mind that the rebounding median sale price was the result of these two factors. Economics 101 teaches us that when interest rates go down prices go up. The allure of the $8,000 tax credit attracted more first time buyers to the market that allowed move up home sellers to sell and purchase a higher priced home.

Here’s the preliminary home sales figures for March 2009 compared to March 2008. Closed home sales 286 up from 254. Median sale price $115,750 up from $105,750.

The first quarter comparison shows 646 closed home sales down from 670. The median sale price $105,500 up from $99,000.

Now for a very interesting Klink moment, March sales pending, 404 down from 409, and in the first quarter 1020 almost dead even with 1021 in 2008. Interesting because you wouldn’t expect with the lowest interest rates on record and the tax credit in force, that we would see a leveling off so quickly.

In fact the 407 home listings under contract today are down from 437 on this date last year. It will be very interesting to monitor activity as we progress into April. I was happy to be wrong in my prediction for home sales in the first quarter, however hope to be right about my prediction the market would be strong through May and possibly into June.

Another challenge home sellers face continues to be the number of homes for sale. Although trending downwards the supply of homes for sale remains the second highest on record with 1686 listed for sale today. Through the first quarter 1366 new listings were added to the 1618 to begin the year for 2832 available for sale at one time or another. The 646 closed sales only represents 22.8% of those listed.

That brings us back to what will determine how the local housing market fares in 2009; jobs. Nationally unemployment jumped to 8.5% the highest in 25 years. President Obama’s economists earlier predicted unemployment would level off around 10% toward the end of 2010. Looks like that 10% may come a lot sooner.

The latest available unemployment figures for Springfield was a little over 7% in February around a full percentage point below the state. When figures are released for March we’ll see if we can continue to run opposite the nation. By the confidence exuded by local business owners this week, we have a good chance. Jobs means home buyers. Interest rates and tax incentives are great, but you need people with jobs to take advantage of this great opportunity to buy a home.

Interesting Klink, verrrry interesting. We shall see. There’s light shining through the trees, but we’re not out of the woods just yet.

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