Fritz Pfister

The final numbers are in for the local housing market for July. As predicted here, July finished up year over year by 13 sales or by 3.5%. This is the second month in a row there have been year over year increases, and with the number of sales pending, August looks to make it three in a row. I wonder if the Capital Area Association of Realtors will continue to do previous month comparisons, if so July was down ten sales or by 2.5% from June.

Sales pending jumped by 42 or by 12.2% July over July, and the median sale price was up $11,250 or by 10.8%. For the year sales pending are now up over 2008 by seven tenths of a percent and the median sale price is up 4.76%. The average sale price is another story, down by 1.37% for the year.

The challenge to get a sale closed once a listing goes under contract is apparent when comparing closed and pending sales. As we entered July sales pending were up by 53 or 12.8%, however closed sales only increased by 13 or by 3.5%. Today sales pending are up by 95 or by 25% over last year on this date. Stay tuned to see how many of those pending actually turn into closed sales.

The inventory continues to run below last year with 1654 homes listed for sale today down 16.8% from last year. The rate of decline in new listings slowed in July with only 7.35% fewer being listed. Through the first seven months of 2009 there have been an average of 290 closed home sales monthly compared to 454 new listings, not including the 1618 that were listed to begin the year. Through July, 43% of the listings sold and closed.

We are blessed to have this surge in home sales. As reported here last week, in my opinion these sales are the result of historically low interest rates, and the $8,000 first time home buyer tax credit. What will happen when the tax credit expires on November 30th? What will happen when inflation takes hold and interest rates go up? You know the answer. That’s why you should act now if you want to buy or sell a home. The window of opportunity remains open. For how long is any one’s guess. Following the expiration of the tax credit, dependant upon what interest rates are, jobs and consumer confidence will be key to the housing market.

There was some lukewarm good news yesterday when the national unemployment rate fell to 9.4% with 247,000 Americans losing their jobs in July. It is good news the rate of decline is subsiding, however there will be no significant recovery while there continues to be a loss in jobs, no matter the number. Economists say it would take at least 200,000 job increases every month until 2013 to return to 5% unemployment.

We have our work cut out for us in Illinois with the state laying off 2600 workers. What the states unemployment rate did in July hasn’t been released but I’m betting it didn’t follow the national trend. We’ll have to wait and see what the unemployment figures are for the state and the city of Springfield.

On the consumer confidence front their were mixed reports this week when AP reported consumer spending was up four tenths of a percent, followed the next day by reporting a five percent drop in retail sales. How can this be? Consumer spending was up because the price of gas was up. Retail sales are down because consumers continue to play it safe, as the consumer confidence index fell in July. It was reported consumers cut debt for the fifth straight month in July increasing their savings rate.

In my opinion the reason consumers are being cautious is due to deficit spending setting up a high probability for inflation, the potential higher cost of living if cap and trade is passed, and the massive spending being called for in president Obama’s health care plan to the tune of over another trillion dollars.

The country is embroiled over the health care plan. The majority of Americans don’t want a government takeover of the health care system which is what the proposed legislation will lead to. Folks don’t want to see their health care costs increased while the availability and quality of their health care declines. The majority of people don’t trust the government to manage their health care system. People want reform, just not what is proposed.

The debate on health care ratcheted up after the CBO forecast the increased cost, and said the plan would not accomplish the goals set forth by Obama, stalling the legislation from being rushed through and passed in August. Now with congress on August break the American people have had the time to read the bill and the majority rejects what’s in the bill.

If congress returns and passes cap and trade, and the health care legislation as proposed, I believe consumer confidence will sink faster than the Titanic after it hit the iceberg. Cap and trade and the proposed health care plan are icebergs packed with explosives, and the economy is the Titanic. The middle class is lodged in the lower decks. The American people are smart enough to know massive tax increases will be on the way for everyone if this version of the health care plan is passed into law.

Last week the presidents economic advisor Summers said he wouldn’t rule out anything when asked about a middle class income tax increase, and secretary of Treasury Geithner said he would do whatever it takes to get the deficit under control when he was asked the same question.

That’s interesting since they are the ones that advised the president to double the deficit in the first six months of his administration, and are the architects of an additional trillion dollars of debt before years end. And now they want to get serious about deficit spending by supporting a trillion plus dollar health care plan? These are the same people that railed about a five hundred billion dollar deficit in 2008, and their solution is to quadruple deficit spending their first year? Somebody wake me up, this has to be a bad dream.

Hopefully the majority of Americans can count upon their representatives not to pass these economically irresponsible initiatives. If health care passes as proposed, and cap and trade passes, do you remember the window of opportunity to buy or sell a home? When that window closes, you better not have your head sticking out the window.

My advice is to take advantage of this opportunity that is here for the taking today. With the uncertain direction the economic geniuses in the federal government, state, and city have the economy heading, at least you can enjoy a nice home until the storm passes, and some leaders with common sense can step forward.

If you think my opinion of the health care plan smells fishy you can snitch on me at flag@whitehouse.gov. Please tell the administration I can’t smell too fishy, I didn’t take my annual fishing vacation this year so I could save some money to survive in their economy. Also tell them I’m simply agreeing with the Congressional Budget Office.

Opinions expressed on this blog are soley those of Fritz Pfister and not RE/MAX Professionals of Springfield, or RE/MAX International.