March Madness In Springfield Illinois

Following two days of incredible winter weather with temperatures in the 60's and 70's March 10 & 11, two tornados ripped through Springfield on the 12th. Of course the nasty arrival of these devastating storms came after dark. Yes, it was determined the two F2 tornados caused destruction along two paths of about 5 to 6 miles each through the city after ravaging countryside and villages to the west of Springfield. Over $100,000,000 in damage in Springfield alone with over 1750 business's and homes damaged or destroyed.

Eight days later, following one of the most amazing recovery efforts, through business, government, and volunteer labors, the city was returning to normal. Power back on, trees being cleared from street and yard. Blue canvass adorning the tops of houses and buildings awaiting the arrival of insurance adjustors and roofing contractors. That's when the March madness continued with a winter blizzard hitting Springfield with 9 inches of snow and 40 mph winds. This on election day.

There continues the March Madness in Illinois, 16% voter turnout. It seems to me that it is madness allowing 16% of the folks to choose who we get to vote for in November contests, to run our local, state, and federal governments.

There was an interesting advisory referendum in the city of Springfield regarding open primaries. Over 80% (of our 16% turnout) voted for open primaries. That is the one and only reason I have never voted in a primary since moving to Illinois in 1980. It is nobody's business which party I choose to vote for. In a politically charged city, the state capitol, where thousands of jobs are impacted by the way you vote, I'm not surprised by the 80% who favor open primaries. Perhaps the state will get the message, pass open primary laws in Illinois, where you could then have 45% of the voters choosing the candidates!

How does all this pertain to my real estate blog? Simple, state government is the largest employer in the area. The more jobs the more home buyers. Our current governor either moved, approximately 7,000 jobs for his political cronies in Chicago, or eliminated the jobs under the pretense of cost savings. The Gov's plans worked real well at IDOT, fewer jobs at a savings of, oops there were no savings, costs increased.

Just as what is beginning to appear in New Jersey with the election of a tax and spend liberal named Corzine, our fabulous Governor ran on a platform of no increase in sales or income tax. Great news, he didn't increase those taxes, just raised over 300 others to the tune of billions, while driving business out of the state to friendlier tax environments. The bad news is the governor also raised spending by billions for his socialistic programs, funded mostly through borrowing, and the delayed funding of state employee pensions by Billions.

Welcome to March Madness in Springfield Illinois. If you would like to ask the governor with the 15 to 20 million dollar campaign war chest, with the liberal promise of a car in every garage and a chicken in every pot, with no earthly clue how to pay for his programs other than raising taxes and borrowing, you can't ask him those questions in Springfield. You must go to Chicago. The Gov only appears here when it is politically expedient, or for a photo op press conference announcing his latest idea for how government can take care of you and your children, while he takes care of private business by taxing them out of the state.

Ah yes, March Madness in Springfield Illinois. Next week I promise to get back on message and bring you the very latest news regarding our real estate market. I just couldn't focus long enough with all this Madness ongoing!

How Iran Can Impact Housing Sales

The news has been full of stories about a housing slowdown. Rising interest rates, satisfied demand, and the steep increase the past several years in the price of housing have all contributed to the slowdown.

In my opinion as long as people can afford to buy, housing sales will remain strong. Certainly the rise in interest rates have diminished the purchasing power of the consumer, however 6.5% 30 year money is still cheap by historic standards. There are other underlying problems in household budgets that are starting to affect the spending habits of consumers.

First the law increasing minimum credit card payments has gone into effect, raising the amount of required payment. Although mortgage rates are still cheap, most credit card interest rates are tied to the prime rate which has increased by 3.5% in the preceding 21 months. The double whammy of required increased minimums combined with higher rates will impact the disposable income of families carrying credit card debt.

The cost of energy has also impacted families disposable income over the past year. The news has been good recently when the price of oil fell slightly below $60 a barrel. That may change with a belligerent Iran being referred to the U.N. Security Council, the Security Council may impose sanctions against the country. One Iranian official claimed Iran would withhold oil from the world markets in response, using oil as a weapon. The next day another Iranian leader said Iran would not use oil as a weapon. Who knows what will happen?

Either way the situation is tenuous at best. Iran seems to be determined to become the next war zone by defying the world with their nuclear ambitions. Not that the U.S. would act unilaterally to quell this threat, other allies of the world would join the quest. Israel cannot risk a nuclear armed Iran, regardless what action the world community may take.

Therein lies the rub, even if Iran doesn't play Russian roulette with the oil markets, something has to give, and that something is Iran's nuclear ambitions. They will give, either as a result of U.N., U.S./Allied, or Israeli action to stop it. During these tenuous times the world oil market will be unstable at best.

Some experts have predicted $100 a barrel oil as a result. That would drive gas over $4 a gallon, and heating costs further through the roof. This will have a devastating impact upon disposable incomes.

The Iranian threat must be dealt with and it will come at a price. The pressures of higher interest rates, new credit card laws, higher credit card interest, and higher energy costs will combine to lower consumer confidence and their willingness to spend. In America, consumer spending is the engine that drives the economy.

The bottom line is, thanks to Iran, the economy including the housing market will be impacted, until the nuclear issues are resolved. Better to have a slowing economy, than a radical country with nuclear weapons that have publicly stated their desire to wipe Israel off the face of the earth, and who want to bring pain to the U.S. Thanks Iran for your humane, & worldly compassion.

Now is the time for congress to take meaningful action and pass laws making the tax cuts permanent. Failure to make tax cuts permanent would be the straw that breaks the disposable incomes' back, which in my opinion would lead to recession. Congress can't control Iran, or the cost of oil, however congress can determine if family incomes will be spent on goods and services, or sent to Washington D.C. to once again be wasted by politicians. Don't be fooled by the "we must raise taxes to pay off the deficit" crowd. Do you really believe any politician will use the money as intended? They never have, and never will.

Call your representatives to congress, and senate today to voice your opinion. Tell them tax cuts sparked the recovery from the last recession (made worse by 9-11). To take back the impetus to the economy in the face of rising interest rates, cost of housing, and energy prices, would certainly lead to recession. Ask them if they are in favor of continued growth, or in favor of government largesse through higher taxes. Then vote in November accordingly.

Changing Real Estate Market Calls for Change of Methods

Bruce Springsteen sang "Glory Days". There's an old saying; "The older I get, the better I was." Recall Ted Williams response when asked; "How do you get so many hits?"; response: "I hit 'em where they aint!".

The real estate markets across America have changed, or are changing. You probably will have friends and coworkers that will become instant real estate experts when they hear you are shopping to buy a home, or are selling your home. They will still think it's 2003, or 2004 when they bought or sold, and therefore will give you dated advice. The market conditions are not the same as then.

How has the market changed? Looking at the national scene, new home sales are down, and unsold inventory is at a 30 year high. Existing home sales have fallen 5 consecutive months for the first time in years, and the number of unsold homes are at record levels. This market of 2006 doesn't even seem like a cousin to the '03, or '04 markets. The only resemblance is that the median price of a home stayed unchanged, at $211,000, compared to the rapid (and might I say rabid) increases of the recent past. History shows that prices flatten before falling, which will happen as we march through 2006. The rate of decrease will correspond to each markets rate of increase. If your market experienced steady growth in prices, decreases will also be gradual. Those markets that experienced rapid, and unbelievable growth rates will fall back to believable.

What change in methods should consumers that want to buy a home make? Patience. In the immediate past markets buyers would have to settle for less home for more money. That is changing. Patience is needed for home sellers to have their feet held to the fire of the new market. Time is the enemy of the home seller, however the ally of the home buyer. The only risk for home buyers not to act quickly is the threat of rising interest rates. Then the question becomes; "Do I want to finance $200,000 on a 30 year loan at 6.3%, or do I wait and finance $180,000 at 7%?". Do your math folks.

What changes in methods should consumers that want to sell a home make? First be aware with increased competition combined with weakening demand, the days of putting a sign in your yard and watching offers flow in the door, are all but over. Not only will for sale by owners have less and less success, so will the many for sale by owner sites, and discount brokers who depend upon volume sales to survive. They will have some success, however not near the success when the market was flooded with buyers and there were scant few homes for sale. Fsbo's and discount brokers will be, if not already, moved from the smoorgasborg to the Weight Watchers line!

The biggest change for home sellers will be the realization that not only will FSBO's have much more limited success, so will many average and below real estate agents, who played order takers during sellers markets. It is time for serious home sellers to interview listing agents and brokers to find the best available. Failure to interview, believing agents and brokers are interchangeable will be the most common, and probably fatal mistake homesellers will make in this changed market of 2006.

Oh yeah, there was another singer of the past, Bob Dylan who sang "The Times They are A'Changin.". The consumer who is aware of these changes will have the most success, while the others live in the past, and wonder why their coworker real estate expert friends, could have been so wrong.

For you in the Springfield, IL. Market here are the housing numbers reported to The Capital Area Assn. Of Realtors MLS for Jan. & Feb. 2006. Carryover of unsold homes at the beginning of 2006 compared to 2005 up 18.8% (+223). New listings added to inventory, up 6.3% (+57). Residential listings sold and closed, down 1.1% (-5). Listings sold pending closing up 12.1% (+74). Expired listings up 14.3% (+44). Withdrawn listings without a sale, up 13.5% (+21). Just to put into prospective the change in our market from just 2004; 2004 began with 984 carryover listings from 2003 that were unsold, compared to 1426 to begin 2006, an increase of 442 more homes for sale, or an increase of 45% in 24 months!