Fritz Pfister

Today is December 27, 2008, the day I promised to share with you my predictions for the local housing market in 2009. Before I begin, let me share my predictions for 2008 from one year ago.

Quote: The prediction for the local housing market is good to begin the year, however will slow as we approach the election. Expect another year of closed home sales between 3900, and 4200, stable to rising prices, and an oversupply of homes for sale. The market will continue to favor buyers due to surplus inventory combined with near record low interest rates. Flat job growth locally in 2008 will hinder any significant increase in home sales, however that will change in 2009 as major projects underway begin to take shape and create permanent jobs. Flat job growth and the media are the biggest hindrances to the housing market in 2008. Close quote.

That prediction was right on two of the three categories. The market certainly did experience an oversupply of homes for sale favoring buyers, with interest rates falling to record lows this fall. Stable to rising prices was accurate with the median sale price dead even with last year through today. However this doesn’t mean scores of home sellers didn’t take losses when selling in 2008. It means half the homes sold above, and half below the same price, and year to date that median price is $104,000.

However my prediction for 3900 to 4200 closed home sales was a bit optimistic; we will end the year with around 3500 closed home sales in the CAAR MLS. With the current economic conditions, projects underway to take shape in 2009 may not create the number of jobs anticipated.

There’s an old saying that is a universal truth; if you want to make God laugh tell him what your plans are. I sure didn’t plan on the collapse of the sub prime mortgage market, the near failures of Fannie-Mae and Freddie-Mac, the price of oil skyrocketing to $147 a barrel, gas prices surging to record highs above $4 a gallon, the cost of food to follow suit, the federal government announcing the imminent collapse of financial markets unless immediate action was taken, followed by trillions of dollars in a bail out frenzy, which all combined to cause the lowest consumer confidence on record, and a pull back in consumer spending not seen in decades.

These little tid bits of information would have been useful to have had when making my predictions for 2008. Of course, if I would have known, I would never have believed local Realtors could have come close to 3500 home sales, once again proving the resiliency of the Springfield Illinois housing market.

I was pleased to hit two out of three right, however disappointed that my reasons were wrong, excepting job growth. I should have my head examined for getting into this prediction business, however if I don’t do it, who will? Who follows this market closer than I do week in and week out for Let’s Talk Real Estate? Nobody and that is why I was honored to be asked to present my predictions for 2009 to the broker owners and managing brokers of the CAAR last month.

Before I make the same predictions as with the member brokers of CAAR, let me share that with the subsequent arrest and ensuing potential impeachment of governor Blagojevich, these predictions may be affected. Should the governor be removed from office, and sensible leadership fills that void, then the economic fortunes of Illinois will become imminently brighter. Although the future will be brighter it will take an undetermined amount of time to repair the colossal damage inflicted upon the economy by the Blagojevich administration.

For 2009 in my opinion there will be further contraction within the housing market with the number of home sales declining to around 3100 in the MLS. The number of new listings will continue to decline to around 5200; however we will begin the year with a record number of homes listed for sale with between 1650 and 1700. Expect about 45% of available listings to sell in 2009.

The market will continue to favor buyers with this oversupply of homes for sale, and with record low interest rates. New construction will continue to contract as builders work to reduce the inventory of unsold product which stands at an 8.5 month supply at the current rate of sales.

My reasoning for these predictions are based upon the jobs outlook. With unemployment rising locally, statewide, and nationally job growth doesn’t appear to be on the horizon in 2009.

The bright side is that the media may not be as big a hindrance in 2009 as in 2008 with an obvious bias toward Obama. With Obama’s inauguration, and the historical new president honeymoon, media reports will probably be favorable, which should improve consumer confidence.

If Blagojevich is successfully impeached, consumer confidence will rise in the capitol city, which is Springfield, for you who are from Chicago.

On the national front, The National Association of Realtors is predicting a 6% increase in existing home sales to 5.3 million from 5.0 million in 2008, and the median sale price to rise 1.1% to $200,800. NAR predicts new home sales to continue to fall to 413,000 in 2009, down from 487,000 in 2008, with the median sales price rising on a new home in 2009 by 1.4% to $231,400. How can I be so confident home sales locally will decline when nationally sales are predicted to increase? Because Springfield historically runs counter to the nation.

There you have it ladies and gentlemen, the predictions for 2009. Take these predictions, and a couple bucks, and you probably can buy a cup of coffee somewhere. Make it a great week from Fritz and Kristie Pfister and the Pfister Success Team of RE/MAX Professionals Springfield. We have decided not to participate in any economic downturn, and would appreciate the opportunity to help you sell or buy a home in 2009. You can reach us by calling 217-652-7653 or e-mail fritz@springfieldhome.com