After fifty-eight months since the end of the Great Recession, home sales have clawed their way back to 2012 levels.
This has mainstream media outlets like Reuters indicating that Janet Yellen and the Federal Reserve may want to continue to keep interest rates low. In other words, what hasn’t worked to spur economic growth, job creation, and home sales, should be repeated. Groundhog Day.
The National Association of Realtors reported that existing home sales in March remained flat from February at a pace of 4,040,000, but down 7.3% from March of 2013. The median sale price was up 7.4% from March of 2013 to $198,200.
The news for the new home sales was even worse. New home sales dropped 14.5% in March to a rate of 384,000. The median sale price rose 12.6% from March of last year to a record $290,000.
Let’s put these reports in perspective, shall we? The 4,040,000 existing home sales compare to pre-recession, pre-QE, pre-lowest manipulated interest rates ever, with a normal market 6,000,000 annual home sales.
The new home sales pace at 384,000 is simply pathetic. 700,000 is the bare minimum to maintain a healthy construction industry. NAR spokesman Maloney said a 1,000,000 to 1,500,000 pace should be expected this time of year.
The report of a recovery has been greatly exaggerated by the left wing extremists running our government to hide their dismal policy failures, and by their breathless sycophants in the media. The reasons given for the non-recovery recovery are predictable.
The weather is reason number one. Not really, but the weather did play a role. In my opinion the rising cost of health insurance premiums killed more sales than all the winter storms combined. Besides, if you break down sales by region, it would have had to snow everywhere except in the northeast which was up. Those damned snow storms in the West and South killed the market?
Reason number two, tight inventory is driving up prices. Sure the laws of supply and demand come into play, but who in their right mind will trade their refinanced mortgage at 3% or lower for a rate 50% higher?
The Fed keeping interest rates too low too long will have a negative impact on inventory for a decade or longer. The normal five to seven year pattern of selling a home to purchase another is over for the foreseeable future.
Reason number three is tighter credit standards are keeping the first time home buyers out of the market. This is true to a smaller degree than the abysmal lack of job opportunities. Sorry son, you have to have a job to get a loan.
Obama job creation after adding $7 trillion to our debt, stimulus spending, green economy cronyism, has only created enough jobs to keep up with population growth. In other words, Obama is 8 million jobs shy of a recovery, and it’s killing the housing market and all aspects of the economy.
I am fairly confident driving up the cost of living for gas, food, energy due to extremist environmental ideology, and the attempt to nationalize health care driving up insurance premiums 41% is the very reason why the private sector can’t create jobs.
Hell the private sector is simply trying to survive this government onslaught, excepting of course the 1% who are the beneficiaries of Obama policy.
Reason number four, rising interest rates are pricing some out of the new home market. Forty year low rates are keeping people from buying a new home? Not really, new EPA and OSHA building mandates are more to blame.
Obama and Yellen are simply out to prove Einstein 100% correct. Sorry to bore you with the same message again, but it’s simply going to be Groundhog Day as long as these policies remain in place. It’s insane to expect otherwise.
Of course I could be wrong. Let’s wait another 58 months and see.
The opinions expressed here are solely those of Fritz Phister or identified sources, and not necessarily those of RE/MAX Professionals of Springfield, RE/MAX International, or the Capital Area Association of Realtors.