The picture on the economy and housing market are coming into focus as we get further into the year.
Here’s this week’s news of note. Obama, the one who would halve the annual deficits by the end of his first term, added over $5 trillion to our debt in only 39 months. The debt has now surpassed $15.6 trillion and is headed for the new and improved $16.4 trillion debt ceiling which will need increased between now and Independence Day. No not the July 4th one, the November 6th one.
Why is this important? It is agreed the housing market can’t recover to all its glory until demand is increased with real jobs and in big numbers. Real is not spelled green. Big numbers aren’t as in census takers, but real, well paying permanent full time jobs. What we refer to in the real estate business as ‘qualified’ home buyers.
The massive debt is unsustainable and everyone knows it except those who spend other people’s money, commonly referred to as presidents, congressmen, and bureaucrats. When the debt ceiling increase comes, so may another credit downgrade. Certainly there will be a day of reckoning when the piper needs paid and everyone’s taxes will go through the roof. Business owners, also known as the ones who hire people, know this too.
Businesses who have a bad habit of budgeting expenses and estimating incomes can’t ignore reality like Democrats, and Harry Reid ignore budgets, now for three years. Harry is too busy telling people how children will starve if he marks up a budget and has to reconcile a Ryan Budget in conference, so he must ignore the Constitution.
How much confidence does business have to hire when they are witness to this rudderless ship spinning towards the falls?
The news hacks were ecstatic this week when it was reported that building permits in March were the highest in three and a half years! Mostly apartment buildings to house the millions losing their home to foreclosure and not single family permits. Never mind March starts fell again, and new construction is running ‘half’ of what is considered healthy.
This isn’t good for job creation. One in four jobs is tied to housing.
Then A. Gary Shilling published a four part series on whether we can avoid a recession in 2012, as if this doesn’t feel like a recession already, shared his estimate that it will take four years to absorb the shadow inventory of homes coming from the flood of foreclosures, that has ‘room’ to drive housing prices down another 20%.
You know we’re in trouble when the debate is about how far the economy will fall this year.
Of course the big news was that Republicans blocked the Buffet Rule in the senate from their minority status again. Then Obama goes out telling everyone how he wants to raise taxes for ‘fairness’, that millionaires want to pay more, and don’t need the money.
I’m fairly confident the small business owner fortunate enough to be making that million bucks may hold back on his expansion plans, like hiring more people, until it is known whether they will be the target of all out class warfare, wealth redistribution fairness, and tax hikes in 2013.
Then there was this stunning news; there was talk this week that the Bush Tax Cuts expiring at the end of the year is causing uncertainty among employers again and is holding back hiring. Same as Obamacare has, and continues to do. Welcome back to 2010 when Obama agonizingly extended the Bush tax cuts. Funny how two years has arrived so quickly, almost like the ten years it would take oil to get to market.
The Obama Trifecta in action, existing home sales down 2.6% in March, probably due to outrageous 3% something interest rates. Businesses frozen in uncertainty aren’t hiring. Initial claims for unemployment drop 2,000, however from a previous week’s adjusted up again number, shows the jobs market is languishing, again.
Debt, tax threats, and Obamacare are the Obama Trifecta. Similar to the Bermuda Triangle, anything that goes in disappears. Tax dollars, jobs, home sales, economic growth, all of it. If Obama gets reelected, this is as good as it gets.
Yogi Berra said about baseball, 90% of this game is 100% mental. The same can be said for the Obama Trifecta, 90% of the non-recovery is 100% Obama.
What should homeowners do who are trying to decide if they should sell their home now or wait? Do it now. You can’t take the chance of waiting to see if America will repeat the same mistake they made in 2008.
The opinions expressed here are solely those of Fritz Pfister or identified sources, and not necessarily those of RE/MAX Professionals of Springfield or RE/MAX International.