What do you do when it’s late in the summer, it’s hot, vacations are over, and everything just seems to slow down?  I’ll tell you what one man did.  It was this week 135 years ago that Charles Boles, after leaving the boredom of Illinois farm life and failing to find his fortune in the gold rush, robbed his first Wells Fargo stagecoach in central California near Copperopolis.  He got away with $160 and went on to commit twenty-eight more holdups … all on foot because he was afraid of horses.  This gentleman bandit would later give himself the nickname Black Bart in a poem he left behind after his fourth robbery.  I’ll bet you thought he was a fictional character.

The town of Dayton, Tennessee got a similarly bad idea, though of a less illicit sort, when town leaders decided to liven things up at the end of a slow summer in 1925.  A few months before, the Tennessee legislature had passed the Butler Act prohibiting the teaching of evolution in schools.  This led to the American Civil Liberties Union running newspaper advertisements around the state offering to help any schoolteacher who was willing to challenge the law.  Dayton town leaders, including the school superintendent, conspired to enforce the new law, arrest a teacher, and host a trial.  They needed a defendant, so they found a local high school science teacher, John T. Scopes, who agreed to be the defendant in the case.  National leaders surrounding the evolution debate soon hijacked the trial and made it a national spectacle.  The courthouse added 500 seats to accommodate the press and spectators, and they set up loudspeakers on the outside lawn and in various auditoriums around town.  A Chicago radio station broadcast the proceedings live, a first in America.  While it was a real trial, for all practical purposes, this “Trial of the Century” was staged.  (For those of you keeping score, the jury … after conferring in the hallway for all of a few minutes … sided with the state, and in late July 1925 Mr. Scopes was convicted and fined $100, which was later overturned on a technicality).

So what’s the lesson to be learned here?  When things slow down, don’t go do something silly … or illegal for that matter.  Clearly, since the end of the homebuyer tax credits new-home sales traffic and contracts have fallen off appreciably.  Citing a government report on single-family housing starts, a front-page article in the Wall Street Journal this week was titled, “Housing Market Stumbles”.  The federal government had subsidized many home sales to the tune of $6,500 to $8,000 for nearly a year-and-a-half, so it is not surprising that some sales were pulled forward and that the market has slowed.  What would be surprising to me would be if this slowdown lasts much longer.  Here are some reasons why:

• Expired tax credits are partially offset by lower mortgage rates.
• Many home buyers did not qualify for the tax credit.
• The median price of a home sold through the MLS is $130,000, so the tax credits represented only 5 to 6 percent of the typical purchase price.  This is not insignificant, but it is probably not enough to derail the housing market long term.
• New foreclosures notices are declining (for five straight quarters) and cancelled notices of trustee sale are up sharply as short sales are becoming more prominent.
• The economy is improving.  Phoenix added 32,000 jobs over the past nine months (but this is preliminary and subject to revision).
• Current months supply of resale listings measure 4.1 months, which is below normal.  Sales will decline some over the next few months and listings may creep up, but supply is not expected to stray too far from normal.

Do I harbor ANY concern?  Of course, but in my opinion recent events have not changed the overall trajectory of the economic or housing market recovery in central Arizona.  In mid to late 2009, there were signs that the national economy was bottoming out, and most analysts were anticipating a slow recovery.  Then in early 2010, much of the economic news was better than expected and many economists began upgrading their forecasts.  Now they are reversing course … back to their original outlook of a slow recovery.  Metrostudy forecasted a slower than normal housing recovery, and we continue to do so.  But, we maintain that it is recovering.  In general, I would suggest that we not over-react to better than expected news, but similarly not over-react to worse than expected news.  If everyone did this then we could be confident that the stagecoaches will keep running safe and on time.