Realtors Reflect Back on the Roaring 90’s
Date: December 29, 1999
For More Information Contact: John
Englehardt, Research Consultant
Madison- Over the decade of the 1990’s the boom in
sales of existing single family homes in Wisconsin has been like
no other, according to the most recent report from the Wisconsin
REALTORS® Association on the statewide home resale market.
Although 1999 year end totals won’t be tallied until late
January 2000, early indications are that the statewide sales
figure will be at or near the record breaking home sales posted
in 1998. With respect to the real estate industry the decade
could be deemed the roaring 90’s. According to estimates by
the National Association of REALTORS®, Wisconsin homes resales
in 1990 totaled an estimated 62,100 units. From that point on,
sales have grown each year, reaching 101,100 for 1998, up an
astounding 63% from the 1990 total.
According to WRA president William Berland, "Real estate
sales prior to this decade tended to be very cyclical. During a
typical ten year period you would expect to see at least a
couple of peaks and valleys. The 90’s on the other hand has
been one big peak."
"The industry has benefited from several things along
the way", explains WRA executive vice president William
Malkasian. "First, a 30 year fixed rate mortgage started
the decade averaging 10% but has not approached that figure
since. Mortgage rates have consistently hovered between 7 and 8
percent throughout the decade."
According to Malkasian, "By contrast, the 1980’s were
marked by historically high interest rates, at one point
reaching nearly 20%. So the decade of the 90’s benefited not
only from the lower borrowing rates but also from some pent-up
demand caused by high rates in the 80’s."
The WRA also points to the positive impact on the market
created by tax law changes. "The late 1990’s has
benefited from a tax law change that essentially removed the
capital gains tax on the sale of a home," adds Berland.
"This really has given a boost to sales the past couple of
years."
"But," says Malkasian, "the real
driving factor for the real estate industry throughout the
90’s has been consumer confidence. It really has had a
snowball effect. In the early 90’s, we were coming out of a
recession which is always a boost to confidence. From that time
on we really didn’t have any economic news or events that have
had a significant negative impact on confidence of the consumer.
A continually strong economy does wonders for how people view
their future, and when the future is bright people invest in
homes."
Driven by strong demand, median home prices have also risen
significantly during the 1990’s. In 1990, the median price of
a single family home in Wisconsin was $69,000. By 1995 the
median had risen to $ 92,900 up 35%; by the close of 1998 the
statewide median had grown to $110,600, a 60% increase from the
1990 figure. Nationally, prices have risen 40% during the period
from 1990 through 1998.
Says Malkasian, "Price increases are really a
double-edged sword. On one hand, rising home prices are a
problem especially for entry level buyers; affordability has
become an issue during the 90’s. Low mortgage rates have
helped to soften their impact as have higher wages, but that
doesn’t hide the fact that some people are just being priced
out of the market."
On the other hand, to homeowners already in the market, the
higher prices come as very good news in the form of
appreciation. "Not many investments can boast that they
provide both shelter and an excellent return on equity over a
ten year period," concludes Malkasian.
The Wisconsin REALTORS® Association is one of the largest
trade associations in the state, representing over 12,000 real
estate brokers, sales people and affiliates statewide.
*Note: Sales estimates for the state are provided by the
National Association of REALTORS® which seasonally adjusts
quarterly sales figures.
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