Wisconsin Housing Market Remarkably Strong In Second Quarter

Date:  August 12, 2004

For More Information Contact: David E. Clark, Economist C3 Statistical Solutions Inc.
Office phone: 262-549-4992
Cell phone: 414-803-6537

Madison - Housing sales in Wisconsin set a new second quarter record according to the most recent report of the statewide home resale market from the Wisconsin REALTORS Association (WRA). Just released REALTORS' figures show second quarter sales of existing homes in Wisconsin for 2004 totaled an estimated 31,725 units - a 9.6% increase over second quarter sales from last year. Nationally, homes sales over the same period were up 16%. The Midwest region also saw an increase of 10.1% over the 2003 second quarter total.

The report attributes the strong real estate market to historically low interest rates, healthy consumer demand and a vigorous national economic recovery. "Even though the Federal Reserve has begun to put slight upward pressure on interest rates, mortgage rates remain at historically low levels," said WRA Chairman of the Board, Walter "Corky" Hellyer. Hellyer noted that home sales moderated somewhat in the first quarter of 2004, making the second quarter rebound even more significant. "The favorable interest rates, combined with an economy that is in solid recovery, has led to a very robust housing market in the state, with every region in the state experiencing strong growth," he said. "Although we don't expect such strong growth every quarter, this performance is indeed impressive given that 2003 was a record year for home sales in the state."

Second Quarter Regional Sales Data

The figures on regional sales volume derived from Multiple Listing Service (MLS) data for Wisconsin counties were all up substantially, with growth rates ranging from +5% in the Central region to an extraordinally strong 20% in the West. Indeed, four of the six regions in the state experienced double-digit growth rates.

Growth for Q2 2004 as compared to the same quarter in 2003, was strongest in the Western region of the state (+20%) with nearly all counties that report home sales experiencing growth. The fastest growing county was Pierce, a suburban county of Minneapolis. Similarly, the rural counties of Buffalo, Pepin and Trempeleau, which are combined for reporting purposes, also grew quickly albeit on lower volumes. However, three urban counties also grew at rates in excess of 20% on more solid volume. Specifically, Chippewa county; Eau Claire county and St. Croix county (another Minneapolis suburb). Likewise, La Crosse county increased, and only Dunn county was flat when compared to Q2 2003.

The Northern region was also up significantly from its second quarter 2003 levels, with home sales increasing 15.8% in Q2 2004. Although two counties grew by at least 100% (Florence and Forest), both growth rates are based on single digit home sales volume in Q2 2003. However, there were a number of counties that experienced strong growth from solid Q2 2003 levels. Among the strongest performers were Sawyer county, and the combined Ashland and Bayfield counties. Also showing very solid growth were the counties of Price, Rusk, Oneida, followed by Washburn county, Burnett county, Barron county, Douglas county and Langlade county. Vilas county was up moderately and Polk county declined slightly. Three counties actually fell more substantially. These include Lincoln county, Taylor county and Iron county although none of these counties lost more than 11 home sales in Q2 2004 as compared to Q2 2003.

Also growing briskly was the Northeast region, where quarterly home sales were 12.6% higher than the second quarter last year. Although Menominee county increased, that was based on sales volume in the single digits. However, Marinette county increased nearly as quickly on a much higher volume of sales. Several counties experienced sales growth in excess of 20%. These included Oconto county, as well as two of the larger counties in the region; Winnebago and Fond du Lac counties. Also showing solid growth was Outagamie county, the combined Door/Kewaunee counties, Shawano county, Green Lake county and Brown county. Waupaca county was flat and Calumet county slid in Q2 2004 as compared to the same quarter in 2003.

The Southeastern region also grew significantly in the second quarter. The region grew at 11.2% with all counties in the area over their Q2 2003 levels. The strongest growth was seen in the Sheboygan area, followed closely by Racine county and Washington county. Also in double-digits was Kenosha county and Walworth county. Ozaukee county and Milwaukee county which is the largest county in the state, grew. The slowest growth was in Waukesha county, which still recorded an increase in home sales in the Q2 2004 as compared to Q2 2003.

The South Central region grew at a more moderate 6.4% with most counties that report quarterly home sales advancing in Q2 2004 as compared to the same quarter last year. Jefferson county, which borders the two largest metropolitan areas in the state, continues to be very strong with home sales up in the second quarter. Also strong on solid volume was Green county. However, other counties experienced much more moderate growth rates. Rock county and Dane county. Dodge county was up, but Columbia county declined and Sauk county fell even more.

Finally, the slowest growth in the region was found in the Central region, which still recorded a 5% increase in home sales in Q2 2004 as compared to Q2 2003. Most counties experienced growth with Adams county and Clark county up, although both county growth rates are based on relatively low sales volume in Q2 2003. However, some of the larger counties in the region also recorded solid increases in home sales, including Waushara county, Wood county, and Portage county. The only major county to experience decline was Marathon county which fell modestly in Q2 2004 as compared to Q2 2003.

Sales

Second Quarter Median Housing Price Data

Home prices in the second quarter of the year also experienced very solid growth according to the Realtors' report. As compared to Q2 2003, median home prices were up 5.9% to $151,700, with all regions enjoying healthy price appreciation. "The fact that sales volume increased as rapidly as it did, while median prices were up more modestly suggests that inventories remained adequate to meet the strong demand in the state," said WRA President William Malkasian. "Although the Federal Reserve has begun to increase short term interest rates, the impact on mortgage rates has been modest thus far," said Malkasian. He noted that 30-year fixed rate mortgages remained in the 6% range over the last four months. "These low interest rates are a significant reason why housing remains very affordable in the state," Malkasian said.

Median housing prices rose in all six regions of the state when comparing Q2 2004 with the same quarter last year, with median home price appreciation ranging from 4.6% in the North region to 6.4% in the Central and South Central regions.

The South Central region increased 6.4% to $168,600. All counties experienced median price growth, with the strongest growth in Columbia county but strong price growth in Sauk county as well. One should always exercise caution when comparing median prices, since it may well be the case that the median sized home varies from year to year. Nonetheless, it is interesting to note that both of these counties experienced a decrease in sales, suggesting that reluctance to lower home prices may be part of the reason why sales fell in the second quarter in those counties. More modest increases in median prices were seen in Green, Jefferson, Dane and Dodge counties, and all of these counties experienced home sales growth over the period. Finally, median home sales prices increased in Rock county.

Also growing 6.4% was the Central region where median prices grew to $111,700 in Q2 2004 as compared to Q2 2003. Within the region, the county with the fastest growing median prices was Adams county which saw median prices rise. This was followed closely by Waushara county. Interestingly, sales volume was also up significantly in both counties suggesting very strong demand pressure on prices. Marathon county was also up, as was Portage county rose. Median prices were up in Wood county, whereas they fell somewhat in Clark county on relatively low sales volume (i.e., just 17 units sold in Q2 2004).

The Southeastern region of the state saw its median prices rise 6.1% to $162,000 and all counties within the region experienced a rise in median prices in Q2 2004 as compared to Q2 2003. Median prices in Washington county were up and this was in a quarter where sales spiked 21.5%. This suggests very strong demand in the county. A similar scenario resulted in Sheboygan county on top of sales volume that was up 25.5%. Ozaukee county median prices rose, which caused it to inch above Waukesha county to become the county with the highest median prices in the state in the second quarter of 2004. Strong median price appreciation was also found in Milwaukee, Waukesha, Racine and Walworth counties. Finally, the slowest price appreciation in the region was Kenosha county.

Median home sale prices grew at 5.7% to $131,700 in the Northeastern region of the state, and all counties within the region experienced either growth, or were flat. Marinette county, which showed very high growth in sales volume (+45.3%), also experienced strong median price appreciation. The same trend existed in Winnebago county (combined with increased volume of 23.6%) and Fond du Lac county (combined with an increase in volume of 21.3%). While it is certainly possible that the median priced home that sold in these counties in Q2 2004 was qualitatively different from the median priced Q2 2003 home (e.g., the home could be larger or in a more desirable location), it is also likely that relatively strong demand also contributed to the resulting price appreciation. Green Lake county saw prices rise substantially over the period. Several other counties also experienced solid median price growth, including Waupaca county, Outagamie county and Shawano county. Slight growth in median prices in Q2 2004 as compared to the same quarter in 2003 were seen in Calumet county and Oconto county, whereas prices were essentially flat in Brown county and they fell slightly in the combined Door/Kewaunee counties.

Comparing Q2 2004 to Q2 2003, median prices were up 5% to $145,700 in the Western region. The fastest median price growth occurred in Dunn county, where median prices rose. Note that these higher prices may have prevented the sales volume from changing significantly, as the number of homes sold was essentially flat in Dunn county in the second quarter as compared to last year. In contrast, Pierce county which borders Minneapolis continues to experience solid appreciation of prices even as sales rose 44.6%. Sales price growth was solid in several other counties including La Crosse county, the combined Buffalo, Pepin and Trempeleau counties and Eau Claire county. Median prices in St. Croix county, another Minneapolis suburb, were unchanged from a year ago. The only county to experience a decline in median prices was Chippewa county where prices fell. This reduction in median prices appears to have contributed to the 25% increase in sales volume in Q2 2004 as compared to Q2 2003.

Finally, the North region had the slowest growing median prices, although they did advance 4.6% to $136,000. Within the region, nearly all reporting counties experienced price appreciation during the second quarter of 2004 as compared to the second quarter of 2003. The highest increase in median prices was in Iron county, where prices rose. This dampened sales volume by nearly one third on a low volume of sales. Several additional counties experienced median price appreciation in excess of 20%. These counties, which had moderate volume, include the combined Ashland/Bayfield counties, Price county, Taylor county, and Rusk county. Among that group of counties, only Taylor experienced a decline in sales volume over that period. Vilas county also had median price growth in the same range. More modest price growth was seen in Washburn, Oneida, Sawyer and Barron counties. Median sales prices were up in Douglas county, and they rose in Polk county, Langlade county, and Lincoln county. Only one county experienced a decline, and that was Burnett county where median prices in Q2 2004 were 16.6% lower than Q2 2003. This price discounting does appear to have stimulated demand for housing in the area, with sales volume up nearly 23% over the period.

Median Price Appreciation

The Wisconsin REALTORS® Association is one of the largest trade associations in the state, representing over 16,000 real estate brokers, sales people and affiliates statewide. Sales estimates for the state are provided by the National Association of REALTORS® which seasonally adjusts quarterly sales figures. All county figures on sales volume and median prices are compiled by the Wisconsin REALTORS® Association and are not seasonally adjusted. Median prices are only computed if the county recorded at least 10 home sales in the quarter.

Wisconsin Housing Statistics Online

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Q2 comparison from 2003 and 2004 Spreadsheet

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