Fritz Pfister

Picture if you will that you’re on a roller coaster. You’re at the top and down you go to the bottom and then rise up to another peak, and are now riding on a level stretch heading toward a sharp turn. That’s the Springfield housing market in 2009. January through May we experienced a decline in the number of home sales only to be followed by sales rising June through August. September through the first eleven days is level with last year. Which direction the market turns next, and how sharp the turn, is unknown.

The preliminary August figures shared here last week did not change with the exception of the addition of two more home listings. Here’s the final numbers for August year over year. The 497 new listings down 5.3%. Closed home sales 370 up 6.9%. Pending sales of 399 up 3.4%. The average sale price of $126,726 up .6%, and the median sale price of $110,000 was down 2%.

Although the market entered August with over 90 more sales pending than August of last year, closed sales only increased by 24. This is evidence of the difficulty to get a sale closed once under contract. The newest challenge this year is getting the home to appraise for the agreed upon sales price between buyer and seller. There is not a scientific tracking mechanism for sales that fail to close, however one can derive an estimate by comparing the number that go under contract to the number that actually close, and the anecdotal evidence provided from speaking with lenders.

This means prospective home sellers can add the appraisal to home inspections, more rigid lending guidelines, financing approval, and constantly changing federal rules to the challenge of getting a sale closed. Not to mention the competition.

The news on the foreclosure front this week did not improve. Foreclosures across the country were up 18% over last August and only 3000 below the record set in July. With rising unemployment, a group of adjustable rate mortgages getting ready to reset, along with the low numbers of loan modifications granted under the Federal foreclosure rescue plan, projections are for foreclosures to continue to climb into 2011 before topping off. Although the foreclosure numbers locally are not as significant as in other markets, they continue to have a modest impact upon local housing inventories and prices.

There remains two serious questions home sellers should be asking themselves; what happens when interest rates go up, and what happens when the first time home buyer tax credit expires in a couple of months?

It has been reported that the recession is over and there is a recovery under way. Many economists say the recovery will be slow due to two factors, consumer spending and unemployment. That this will be a jobless recovery. Jobs truly are the key to future activity in the local housing market when interest rates go up, and the tax credit expires. People that don’t have jobs, and those who are worried about losing their jobs don’t buy houses. Where else can the demand for housing come from other than job creation?

I have a very simple plan to propose to the Obama Administration and Congress. The Stimulus plan is a proven loser, over 2.5 million jobs have been lost since the passage of the Stimulus bill. Less than ten percent of the allocated money has been spent, mostly money to states to pay unemployment benefits, and medicaid bills, creating few if any jobs.

In my opinion the most important part of the Stimulus plan is infrastructure that would create jobs now and accomodate future economic growth. Regrettably the amount of money dedicated to infrastructure was woefully short, and back loaded to be spent beginning in 2010 for political reasons. The need for creating jobs now in 2009 was ignored so representatives running for re-election in 2010 could pose for ribbon cuttings closer to an election. Thousands of shovel ready projects are reported to be on hold.

The most disturbing part of the Stimulus plan for tax payers is all the pork promised for every liberal pet project ever conceived consuming hundreds of billions of dollars. Most people think it’s a waste of tax payer funds to spend millions to protect a San Francisco marsh mouse, spend millions to build a turtle tunnel under a Florida highway, build skate parks in New England cities that are laying off police and firemen, and billions for Community organizers, are just a few of the hundreds of examples of waste, that will have little if any stimulative impact upon the economy. More waste and fraud.

Here’s my plan. Rescind the current Stimulus plan and write a new plan that will actually create jobs and attract investment capital. Reallocate the remaining $680 billion in funds by doubling the amount dedicated to infrastructure (from $75 to $150 billion), and beginning the year 2010 replace the $8,000 first time buyer tax credit with a $10,000 tax credit for anyone who buys a home, and increase the credit to $15,000 if the buyer purchases new construction.

Ladies and gentlemen one in every four jobs is related to housing. Housing caused the financial meltdown and housing can lead us to economic recovery. Pass these tax incentives, and even if interest rates rise modestly, watch the housing market boom along with all the associated industries tied to housing. This would prevent a jobless recovery, speed up the recovery process, and with more people working and paying taxes, increase revenues to local, state, and federal governments.

Any bets that less than half the 680 billion unspent Stimulus dollars would be needed to spark a recovery? Consumer confidence would rise over night if families knew their tax dollars would be going to actually create jobs, and protect their most valuable asset, instead of being spent on the liberal Christmas tree of waste now in place. Infrastructure contractors could begin hiring now instead of waiting until it is politically opportune. New home construction, which is at an all time low, would recover. Existing home sales would jump. This simple plan would put millions of families back to work. If it only takes half the money to jump start the economy then rebate to the taxpayers the balance, and what I mean by a tax payer is actually those who pay taxes.

Of course this simplistic plan can only work if the current proposed Cap and Trade, and Health Care Reform legislation is defeated. Both are unaffordable at this time, and would neuter the economic impact of a new Stimulus plan. Cap and Trade is estimated to add an additional 2 million job losses beyond any green jobs created, and would tax every man, woman, and child in this country with higher costs of living. Whether it’s the Obama $900 billion estimate, or the Congressional Budget Offices $1.2 trillion estimate, regardless your position on health care reform, or climate change, this country can not afford either during a recession.

Let’s put America back to work by rewriting a stimulus plan, one that actually stimulates the economy. If taxpayers are going in hock for $787 billion, shouldn’t the government make it worth while?

I’m sure there are those who would oppose changing the current stimulus plan like; marsh mouses, skate boarders, condom manufacturers, Caribbean rum distillers, Community organizers, and Florida turtles, however I believe that people and jobs are more important.

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