Gaga Over Good News In Springfield, Illinois
The official numbers were released by The Capital Area Association of Realtors (CAAR) for the month of September
. It was great news both locally and nationally on home sales. The local market finished up 14.1% to 364 closed home sales, and the median sale price was up 7.9% to $109,000 September over September. Nationally the number of home sales jumped 9.4%, the median sale price fell 9% to $174,900.
In my opinion everyone went gaga over the news. Glad that they did, of course had they listened to LTRE they would have had that news two weeks ago, and also learned how to put this report into perspective.
The 1662 homes listed for sale today may be down by 17.3% from last year on this date, however represents more listings than will sell in a typical fall/winter cycle. The five year average is 1601 closed sales.
It was nice to receive good news following last weeks bad news on unemployment numbers. Springfield is up to 7.9% and the state is up to 10.5%.
Jobs will be critical to keeping momentum going in the local housing market. Record low interest rates and the first time buyer tax credit were the right medicine for our market which was literally in the tank the first four months this year. There's no word on whether congress will pass an extension or expansion of the tax credit.
If a tax credit is not extended we will probably see the wind come out of the sails. Back to normal. Good luck to first time buyers that have not gotten a home under a purchase contract yet who wanted the credit.
Please allow me to prove the power of the tax credit from right here in Springfield Illinois. The first four months of the year were awful by historical standards. The credit wasn't made available until the Stimulus Bill passed in February.
It takes time for professionals to learn the details of the program, and get the information out to the public. The impact of the tax credit really didn't appear until we noticed a spike in home listings going under contract in May.
How many home sales closed the first four months of 2009? Nine hundred thirty five. How many home sales closed the past four months? One thousand five hundred and twelve. An increase of 577 home sales or a whopping 61.7% more. Yes we always see more home sales on average this time of year, but not 61% more!
The power of the tax credit on display ladies and gentlemen. In my opinion those first time home buyers that were smart enough to take advantage of this golden opportunity will look back in a couple of years and realize just how lucky they were.
When the economy begins to add jobs, which is not predicted to happen for six or more months from now in time for the elections, it is then that you will see interest rates begin to rise, inflation take hold, and you probably will have higher taxes.
Who is on the band wagon to raise your taxes? The county which has done an excellent job of holding the line says they may have to consider an increase. No word from the city, but you know it's coming. The state? Democrats in power are fighting over which way and how much to raise your taxes.
Then there's the federal government. The Obama administration will be allowing the Bush tax cuts to expire in 2010. Obama has some fancy footwork to do if he wants to keep his pledge that "nobody who makes less than $250,000 will see their taxes increase a dime." If not everybody's taxes are going up.
Then there's the health care bill that will cost everyone regardless the final version. They won't be called taxes under the plan they'll be called fines, and penalties enforced by the all compassionate IRS. How much is this health care plan going to cost you? We'll have to wait and see, but I'm betting on plenty.
The Democrats writing the bill are dead set against any free market solutions and are striving for a takeover of the health care system. Too bad, this type of destructive reform is disastrous in more ways than just the cost.
Same for Cap and Trade if passed, not called a tax, but the cost of living goes up for every man, woman, and child in this country. Too bad on this one too, where health care needs reformed, cap and trade is based upon a hoax, and totally avoidable.
Doesn't matter anyway, the EPA received a gift from a liberal decision at the Supreme Court last year when CO2 was declared a pollutant. As you sigh, the Supreme Court says you are polluting the air. How utterly insane.
Why should home sellers care about higher taxes, and the costs of health care reform, and cap and trade? Because as expenses go up, disposable income goes down. This always results in fewer home sales. Unless of course everybody gets a big fat raise to offset these forced expenses.
Most people are lucky just to have a job let alone expecting a raise. If these proposals pass, people will lose jobs. An unintended consequence of government's good intentions. Add the price of gas to this list threatening your income as oil has jumped due to the falling value of the dollar.
I don't know about you but I can't wait to see what takes place in America in 2010. Nobody knows for certain what will happen, but this I guarantee you; the government will get bigger requiring more of your money.
Oh, and there will be elections in 2010. I wish I could make some guarantees about that. Maybe there is one guarantee to be made, if voters don't get it right this time, then this time voters will lose more rights.
So this week as everyone went gaga over the good news, let's just relish in that for the moment. It's not going to last very long. Kinda like a bowl of ice cream.
by: Fritz Pfister
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