Housing's Cash For Clunkers Moment, Springfield Illinois..may Sale Pendings Drop Significantly

Do you remember the cash for clunkers program meant to spur car sales

? Congress spent 3 billion dollars to incentivize folks to buy a car with about a $4,500 gift from taxpayers. The result? A record high August 2009, and a record low September for car sales.

A local appliance store owner shared with me they disliked incentives. The recent incentive by the state offering up $7 million of your tax dollars to folks to buy a more energy efficient appliance saw that money disappear in a matter of hours. Why? This owner said most folks that had placed orders to buy postponed their purchase until the day of the incentives. This hurt his sales before and after the program. What good did the incentive do for the appliance business, a net zero.

This is why I was opposed to the Stimulus bill which included tax incentives for home buyers. Did the program attract people to the market that may not have purchased a home without the incentive? Probably, but how do you quantify that, and wouldn't those folks be smart enough to purchase a home anyway with prices down double digits across the state, and record low interest rates below 5%?

The result is the artificial market created by the government probably increased sales nominally, while poking a $100 +/- billion hole in the deficit that everyone will get to pay back with interest. The incentives also have created peaks and valleys in the Springfield market never seen before in my career which began in 1987. Where a professional could predict with reasonable confidence and accuracy future market performance for their clients, they now can only guess.

Sure closed home sales were up in May, but those were from March and April sales pending. The 415 closed home sales in May were up 28.88% or by 93 over last May, and was the third best May the past ten years. That's all good, but this is where the peaks and valleys caused by the tax incentive comes in; sales pending of 299 down 147 or by 32.9% from last May, and down 340 or by 53.2% from April. In simple terms the number of buyers was cut by more than half in one month.

The first week of June continued the same trend. So what is a professional to tell their clients that need to sell their home? Good news, we're closing out near record number of home sales on the homes sold in March and April, but we now have less than half the number of buyers in the market today. This doesn't give current home sellers a warm and fuzzy feeling so they ask; What can we do to get sold? Lower your price to below all competing comparable homes.

It is quite the dilemma for the Springfield Illinois housing market, and I'm sure for markets all across the country. How long will it take to replenish the demand for homes? At the pace the economy is adding jobs there is little doubt demand will remain soft for months if not years.

The Bureau of Labor Statistics reported a disappointing net 431,000 jobs were created in May, however only 41,000 were private sector jobs, the rest government jobs consisting mostly of temporary census takers. The stock market tanked again as a result.

It was reported that even the census job numbers are misleading because the government is churning those numbers by laying off workers for a couple weeks, then rehiring them to make it look like a new job was created. In a couple months the census will be concluded, what will unemployment numbers look like then?

I have absolutely no confidence in the Obama administrations economic policies. They have failed and continue to fail, while the President says we are in recovery. Really? If you call the private sector creating 41,000 jobs heading into the summer when job numbers usually spike, and you need to add 150,000 a month just to keep pace with population growth, then you simply are ignoring or are ignorant of reality.

The pathetic economic policies of the Obama administration contributes to nervousness not only at home but abroad. Now in addition to Portugal, Italy, Ireland, Greece and Spain comes Hungary yesterday saying its economy was in dire condition. Once those dominoes in Europe starts to fall, if they do, then the contagion will seal a double dip recession in the U.S.

People realize this and are pulling in their horns with consumer spending falling for the second straight month. Businesses realize this and are not hiring. Both consumers and businesses are scared. People aren't stupid, they know the dangerous path we are on with an out of control federal government spending the country into bankruptcy.

The federal government is broke but the representatives and the Obama administration continue to increase spending. This is insane economic policy, if Obama was right, that government spending created jobs and economic recovery, we wouldn't have one person without a job today.

Why? Obama will add over $3 trillion to the deficit in only his first two years in office. Time to drive a stake through the heart of Keynesian theory, and return control of the House of Representatives to Republicans where all financial bills emanate. If the Republicans regain control of the house and fail to stop deficit spending, then drive the stake through the heart of the Republican party too.

Why all the gloom and doom? Believe me, it shouldn't be this way, but people deserve to know the truth. This economy isn't in recovery with over 15 million people without jobs and no jobs being created. Obama economic policy, which is at best crony capitalism, is helping wall street and big business, but devastating the middle class and small business. His government expansion is crushing the private sector as predicted.

Need we say anything about state government in Illinois? This has to be the most dysfunctional group ever to govern any state. The Chicago machine is bleeding the state dry with its stranglehold on the legislature. There either needs to be a change in leadership, or we must divide Illinois into two states. South Illinois and North Illifornia.

Eleven billion dollar deficit, four and a half billion in unpaid bills driving state contractors and vendors into bankruptcy, and the governor's only solution is to borrow and raise taxes which will drive more business out of Illinois. We have become Illifornia. This is what happens when you have a lack of leadership, the results are the same as we are suffering at the federal level.

Big changes must be made at both the state and federal levels to right the ship and get back on course. Enough of the liberal experiment. We see now where good intentions lead. A path to somewhere as I recall. Government can't be all things to all persons. The entitlement state must end or it will kill the host.

We are creating a new generation of dependency non-producers. Who can blame them? Obama now rewards states with bonuses who increase their welfare rolls and has removed the work part of the Clinton welfare to work initiative. Guess that will buy votes, kill the economy as the producers are weighed down by the cost of the non-producers, but buy votes.

A return to sound fiscal economic policy can only occur with a changing of the guard at all levels of government, and a return to our founder's intent of limited government. That or pay the consequences, or as our generation will be remembered, make our children and grandchildren pay the consequences.

Time to wake up people. November can't get here fast enough as far as I'm concerned. Folks it doesn't look good for the economy and the housing market. The exact opposite of what is needed is what Obama is doing, he of zero executive experience, with an administration with only one member with private sector experience.

So much for the egg heads of Harvard and Princeton. Theory doesn't match reality and the people suffer. At least the egg heads were well intended. Problem is you can't feed your family on good intentions.

by: Fritz Pfister

POST COMMENT

Tacx Fortius Virtual Reality Trainer Fun And Effective House Work Out House Painting Is Made Uncomplicated Using Professional Equipment Looking at Buying a House? Here's How You Can Use a Property Records Search to Help POWER: A Memo From the White House Find The Best House Cleaning Service In Washington DC, Maryland Or Virginia For Your Home Or Office The best way to Eliminate those Pesky House Ants Custom Greenhouse Construction Tips For Making A Business Plan For A Bounce House Rental Business How Am I Able To Sell My House Fast? Taking To Pension Houses, Planetariums, Drinking, Sand Castle Lessons And Holiday Trip At South Padr Experts On Warehousing In New York HELP! My cat is urinating all over my house: a toileting dilemma Delegate Household Needs to Castle Improvements, San Diego Garage Door Installation