Wisconsin Housing Market Remains Solid in Third Quarter

Date:  November 16, 2004

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

Madison - The Wisconsin residential home sales market continued its record pace, setting a new all- time high for the third quarter, according to the most recent analysis of statewide existing home sales conducted by the Wisconsin REALTORS® Association (WRA). While the pace of sales growth moderated, the REALTORS® analysis reveals that home sales in the state were higher in the third quarter of 2004 than any other third quarter in state history. Sales of existing homes in Wisconsin for 2004 totaled an estimated record 30,700 units - a 0.4% increase over the third quarter sales from last year. Nationally, homes sales over the same period were up 4.1%, whereas the Midwest region saw home sales fall slightly (-0.5%) as compared to the third quarter of 2003.

"The strong real estate market can be attributed to a combination of low interest rates and an improving jobs market in the state," said WRA Chairman Kitty Jebwabny. "With 30-year fixed rate mortgages averaging below 6% over the quarter, and with the statewide unemployment rate ranging from 4.7%-5% over the period, consumer demand remained solid in the state," she said. Jebwabny suggested that Wisconsin home sales should remain robust for the foreseeable future. "The national economy continues to improve as indicated by recent increases in jobs, and the Wisconsin labor market typically outperforms the nation," said Jedwabny. In fact, during the third quarter of 2004, there were more than 48,000 additional jobs in the state as compared to Q3 of 2003 (based on seasonally adjusted averages).

Third Quarter Regional Sales Data

The figures on regional sales volume derived from Multiple Listing Service (MLS) data for Wisconsin counties were up in all but one region. Growth rates for Q3 2004 over Q4 2003, were very strong in the Central region (+8.4%), and they were more modest (1.9% - 3.5%) in the Northeast, Southeast, and North regions. The South Central region was flat, and the West was the only region experiencing a decline (-7.9%) in Q3 2004 as compared to the same quarter in 2003.

Growth for Q3 2004 over Q3 2003 was strongest in the Central region of the state (+8.4%) with nearly all counties that report home sales experiencing growth. Several counties showed double-digit growth, including Waushara county (+31.3%), Clark county (+23.8%) and Wood county (+21.6%). Sales were up a solid 5.3% in Adams county, and they were up 4.4% on strong volume in Marathon county in the third quarter. The only county to report a decline in sales was Portage county, which fell 6.7%, although this was only 15 fewer units in the third quarter of 2004 as compared to the third quarter of 2003.

The Northeast region also recorded solid growth, with existing home sales up 5.3% in the third quarter of this year, as compared to the same quarter in 2003. Within the region, however, the picture was mixed, with some counties up substantially, and other experiencing decline. The counties with the strongest growth were Winnebago county (+28.8%) and Fond du Lac county (+28.1%), both of which had solid volume. Oconto county was also up significantly (19.6%), as was Manitowoc county (+15.3%). Door and Kewaunee county, which are combined for reporting purposes, were up 13.9%, and Marinette county was up 10.6% in Q3 2004 as compared to Q3 2003. Calumet county was down slightly (-0.8%), as was Outagamie county (-1%). The decline was slightly higher in Shawano county (-1.9%) and Waupaca county (-2.8%). Several counties in the region experienced more substantial reductions in sales, with Brown county down 7.9%; Green Lake county was off its Q3 2003 pace by 15%, and Menominee county down 33.3% (albeit on volume below 10 units).

The Northern region was up 2.6% in Q3 2004 as compared to Q3 2003. Forest county nearly tripled its volume, growing from 7 units sold in Q3 2003 to 26 units in Q3 2004. There were a number of other counties that experienced double-digit growth during the quarter, including the Ashland and Bayfield county (+48.4%) which are combined for reporting purposes along with Sawyer county (+35.1%), Burnett county (+21.7%), Rusk county (+20.8%) Price county (+18.2%); Taylor county (+15.8%) and Douglas county (+12.1%). Moderate sales growth was seen in Langlade (+5.9%) and Oneida (+1.1%); sales were unchanged in Washburn county and sales fell in the counties of Vilas (-2%), Polk (-5.8%), Iron (-13%), Lincoln (-14.3%) and Barron (-20.9%). The 66.7% decline in Florence county is inconsequential since home sales were below 5 units in both quarters.

Home sales in the Southeast region of the state were up 1.9% in the third quarter of 2004 as compared to that same quarter last year. The strongest growth was seen in Racine county, where home sales increased 9.7% in quarter over quarter sales. Also solid was the most populous county in the state, Milwaukee county, which grew 5.6%. Most of the remaining counties had sales that were similar to Q3 2003 levels. Specifically, Washington county was up 1.5%, Sheboygan county was essentially flat (+0.5%), Kenosha county was down 1.5% and Walworth county was off its Q3 2003 pace by 2%. Waukesha county fell moderately (-3.5%), and Ozaukee county declined 6% in the quarter.

While home sales within the South Central region were basically unchanged (+0.1%) in the third quarter of 2004 as compared to the third quarter of 2003, several counties experienced substantial growth. Up by a factor of two to three were Richland (+240%) and Lafayette (+133%) county, although both counties had fewer than 10 sales in Q3 2003. However, Grant county saw its sales rise 27.1%, and Iowa county was up 21.7%, with both counties having more than 20 sales in the third quarter of last year. Dane county was up 10.3% in the third quarter, and Crawford county grew 3.4% over the period. However, several counties experienced sales declines, and some of these reductions were sizeable. Specifically, Columbia county was down 3.7%; Green county fell 5.9%; Dodge county fell 6.8%; Sauk county experienced sales reductions of 14%, Jefferson was off its pace by 16.1%, and Rock county, which has suffered significant manufacturing job losses since the onset of the recession in 2001, slid 18.8% in Q3 2004 as compared to Q3 2003.

The only region to experience a substantial reduction in sales volume in Q3 2004 as compared to Q3 2003 was the Western region, which fell 7.9%. As was the case in most other regions, home sales rose in some counties, and fell in others. For example, existing home sales more than doubled (on single-digit volumes) in Vernon county (+167%), and they were up 14% in Buffalo, Pepin and Trempealeau counties, which are combined for reporting purposes. Chippewa county was up 2.1% on solid volume. However, Dunn county was down slightly (-1.5%), and both Eau Claire (-5%) and LaCrosse (-6.3%) were down modestly on volume in the neighborhood of 400 units in Q3 2003. Two of the suburban counties around Minneapolis, which have been red-hot in recent years, finally moderated somewhat. Specifically, Pierce county fell 9.3%, and St. Croix county declined 19.7%, falling by 100 units.

Third Quarter Median Housing Price Data

Home prices in the third quarter of the year experienced healthy growth according to the REALTORS® report. As compared to Q3 2003, median home prices were up 6.2% to $154,500, with all regions enjoying price appreciation. "These figures continue to show that housing is one of the safest ways to accumulate wealth. Housing has been appreciating at rates well above the rate of inflation for more than a decade," said WRA President William Malkasian. But he added, even with this solid rate of appreciation, housing is an affordable option for households through out the state. "The Fed continues to hold the line on inflation, which is the primary reason lenders are willing to make 30-year loans at 6% or lower," Malkasian said. "With the economy now in solid recovery, households should be able to realize their dream of homeownership. Indeed, minority homeownership rates are at record levels nationally," he noted.

Median housing prices rose in all six regions of the state when comparing Q3 2004 with the same quarter last year, with median home price appreciation ranging from 1.3%-1.8% in the North, Northeast and Western regions of the state to 4.3%-8.7% in the Southeast, South Central and Central regions.

The Southeast region saw median housing prices rise 8.7% to $168,000 in the third quarter of 2004 as compared to Q4 2003. All counties experienced solid housing price appreciation, with Milwaukee county up 11.6% to $145,700. This was followed closely by Waukesha county, which was up 10.2% to $245,200 making it the county with the highest median prices in the state. Also strong was Washington county, where median prices rose 8.2% to $196,700. Several counties clustered in the Southeastern most quadrant of the region experienced median home sales prices in the 7% range. Specifically, Walworth county was up 7.4% to $170,000; Racine county increased 7.3% to $142,000; and Kenosha county was up 7.2% to $152,000. Median prices in Sheboygan county rose 6.3% to $127,500, and they increased 4.8% to $237,500 in Ozaukee county.

The South Central region grew 7.3% to $171,700 in the third quarter. Median prices in Grant county grew at an astounding 45.5% to $109,100. Given that sales volume was also up 27.1%, this suggests that demand is increasing at a faster pace than supply in that area. However, two other rural counties also experienced solid median price appreciation. Sauk county had median prices rise 15.5% to $160,000 in the Q3 2004 as compared to Q3 2003 and Jefferson county experienced a 13.3% increase in median prices to $155,400. Also solid were Dane county (+7.4% to $200,000), followed by Rock county (+5.9% to $120,000), Dodge County (+5.8% to $119,100), Crawford county (+4.2% to $90,000) and Columbia county (+4% to $148,600). Very slight housing price appreciation was seen in Iowa county, which grew 1.1% to $130,000, whereas prices actually fell somewhat in Green county (-5.3% to $120,000).

Also experiencing solid median price growth in the third quarter was the Central region, which increased prices 4.3% to $118,200. As was the case in the second quarter of this year, median prices in Adams county grew at the fastest pace of any county in the region, (+22.1% to $116,000). No other county grew in double digits, and it should be noted that sales volume in Adams county was only in the range of 20 units in both Q3 2003 and Q3 2004. Nonetheless, the county appears to be an area with very strong demand for housing. Two of the larger counties in the region also experienced solid median home price appreciation. Specifically, Marathon county saw median prices rise 7.4% to $127,500 and median prices rose by 6.8% to $129,500 in Portage county. The rate of median price increase in Wood county, which is another large county in the region, was more moderate (+1.3% to $87,300), and they declined somewhat in Waushara county (-3.8% to $110,000). The only county to show substantial reductions in median prices was Clark county, where the median price fell 31.8% to $75,000. It is worth noting that like Adams county, sales volume in Clark county is low (i.e., in the 20s in both Q3 2003 and Q3 2004). Thus, median price comparisons should be made with caution since it may well be the case that the "typical home" that sold in Q3 2004 was qualitatively different from the home that sold in the previous year. Such a shift in quality is less likely to be observed in large counties with many more transactions taking place on a quarterly basis.

Median prices in the Western region were up by 1.8% to $148,300. Within the region, most areas experienced median price growth in Q3 2004 as compared to the same quarter last year. As has been the case in the recent past, the Wisconsin counties that border Minneapolis have outpaced the region in terms of median price appreciation with Pierce county up 11% to $184,400 and St. Croix county up 7.6% to $192,300. It should be noted that both of these counties experienced sales volume declines in Q3 2004 as compare to Q3 2003, suggesting that supply has not kept pace with demand in the third quarter. Similarly, two of the other large counties in the region (Eau Claire and LaCrosse) experienced modest increases in median prices, while their sales volume declined slightly. LaCrosse county was up 5.2% to $133,300, and median prices were up 4.5% to $133,700 in Eau Claire county. Median prices rose 3.2% to $121,300 in Chippewa county, and they increased 2% to $134,300 in Dunn county. Countering the trend toward rising prices were Buffalo, Pepin and Trempealeau county, which are combined when they report sales activity, down 8.6% to $94,400.

Median home sales prices grew at 1.6% to $140,000 in the Northern region of the state. Within the region, some counties experienced growth in their median prices in Q3 2004 as compared to Q3 2003, whereas median prices fell in some other areas. Median prices were up 20% to $180,000 in Iron county, and they were also up 18.9% to $216,700 in Vilas county. Both counties experienced modest declines in sales volume, suggesting that demand was outpacing the available inventory during the quarter. Like Pierce and St. Croix in the Western region, Polk county saw healthy median price appreciation (+9.6% to $162,200) even as sales volume moderated. Median home sale prices were also up 5.9% to $90,000 in Langlade county, and they increased 5.6% to $150,000 in Sawyer county. Slight increases were seen in Rusk (+1.4% to $86,200) and Barron (+0.4% to $123,600) county, whereas slight declines were observed in several other areas including Lincoln county (-1.2% to $84,000), Burnett county (-1.6% to $152,000), Oneida county (-1.8% to $144,000) and in Price county (-3.1% to $77,500). The median price reductions appear to be more sizeable in Douglas county (-8% to $142,000), Washburn county (-14% to $146,200), Taylor county (-21.5% to $86,400) and the counties of Ashland and Bayfield, which report their sales figures collectively (-24.7% to $103,100). Note that sales volume in Ashland and Bayfield counties were up substantially (i.e, 48.4%) suggesting that some discounting of prices may be generating this boom in sales activity.

Finally, median sales prices grew 1.3% to $126,200 in the Northeastern region of the state, and some counties experienced median price appreciation over the Q3 2003 to Q3 2004 period, whereas others saw their median prices fall over that time period. The county with the strongest growth was Oconto county, which had median prices rise 30.3% to $122,900 in the third quarter. This is in a quarter where sales were up nearly 20%, suggesting that strong demand is fueling these price increases. A similar scenario appears to be playing itself out in two other areas that experienced solid increases in sales volume. Specifically, median prices were up 8.2% to $155,000 in the combined Door and Kewaunee counties, and they rose 7.4% to $80,000 in Marinette county. In contrast, median price increases in Shawano county of 13.8% to $110,000, had a slight dampening effect on demand, as sales fell about 2% over the period. Modest positive changes in median prices were found in Outagamie county (+4% to $130,000), Waupaca county (+2.8% to $110,700), and Brown county (+1.3% to $144,600), whereas moderate negative price changes were seen in Calumet county (-1.3% to $149,400) and Fond du Lac county (-2.2% to $118,500). Only Green Lake county experienced more substantial median price reductions, falling 6.7% to $105,700.

The Wisconsin REALTORS® Association is one of the largest trade associations in the state, representing over 17,000 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

Printable Copy of this Press Release

Q3 comparison from 2003 and 2004 Spreadsheet

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