2010 September Home Sales Report
Home Sales and Prices Fall in September
Date: October 19, 2010
MADISON, WI – September 2010 home sales in Wisconsin were well off pace from a year ago but prices fell only slightly, according to data just released by the Wisconsin REALTORS® Association (WRA). Sales of existing homes in September were down 30.9 percent from September 2009, whereas median prices fell just 1.8% to $141,000 over the same period. The drop in sales was expected, in part, due to the now-expired federal home buyer tax credit program that incentivized many “would-be” buyers to purchase a home earlier in the year.
“The federal tax credit was a great incentive and drove many buyers to purchase in the spring, which resulted in lower home sales volume during the months of July through September,” said John Horning, Chairman of the WRA Board of Directors. Horning noted that the year-to-date picture through the first nine months is less dramatic, with home sales down 4.0 percent compared to last year, and median prices down just 0.8 percent.
“The market is shaping up to be a mirror image of last year,” said Horning. “The first half of 2009 was abysmal for housing in the state, but with the help of the federal tax credit, in the second half of the year, sales spiked,” said Horning. By contrast, Horning said, the first half of 2010 was strong but with the expiration of the tax credit, the market experienced “a hangover effect.” Horning continued, “Anytime you have a temporary program like this, it will always borrow sales from the future, and we are now seeing the flip side of that coin.” “While new listings have declined from their peak in March 2010, this is a typical seasonal pattern,” he noted.
Despite decreasing sales, the underlying market fundamentals are strong, according to WRA President Bill Malkasian. “We still have historically low mortgage rates, very healthy inventories, stable prices and as a result, high levels of affordability,” added Malkasian. He also noted the WRA has launched a new monthly “Housing Affordability Index” designed to measure how much of a median-priced home a median-income family can afford in Wisconsin. The REALTORS® will release this new measurement tool of housing affordability starting in October on a monthly basis.
“Our housing affordability index stands at 212 in September,” said Malkasian. “That means at the current interest rates, assuming a 20% down payment, a family with the median state income can afford to buy a house valued at 212% of the median home price in Wisconsin. Clearly, this is a great time to buy a home in Wisconsin for credit-worthy buyers,” said Malkasian. While good news, Malkasian cautioned that a robust recovery in the housing market will require healthy job growth. “Despite the fact that we added 23,000 jobs in Wisconsin since January 2010, we need to see unemployment improve before consumers are confident enough to get back into the housing market in large numbers,” Malkasian added. “There are some amazing opportunities available to consumers for when they decide to enter the market.”