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Housing Sales Set Another Quarterly Record in Wisconsin
Date: November 17, 2005
For More Information Contact: David E. Clark, Economist
C3 Statistical Solutions Inc.
Office phone: 414-803-6537
Madison - Despite predictions of a cooling housing
market, Wisconsin's residential home sales market set 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). Sales of existing homes
in Wisconsin for the third quarter of 2005 totaled an estimated
32,825 units, which represents a 9.4 percent increase over third
quarter sales from last year. The Wisconsin housing market
outpaced both the nation and the Midwest region with sales up
6.5 percent nationally and home sales growing 5 percent in the
Midwest.
"The strength of this market is truly impressive, given that
this growth is on top of the already record-high levels
established in the state in 2004," said WRA Chairman Jeff
Kitchen. "The two most important factors driving this market are
low interest rates and a solid job market," said Kitchen. He
noted that conventional 30-year fixed rate mortgages in the
third quarter were actually about 10 basis points lower than
their levels from last year, and that the Wisconsin unemployment
rate also fell slightly, with third quarter unemployment now
just over 5.6 percent. But Kitchen also said buyers may be
active in the market in anticipation of interest rates going up.
"With the Federal Reserve continuing to raise short-term
interest rates, some of these buyers may have been worrying that
mortgage rates will start to increase in the near future, which
got them off the fence and into the market," he said.
Third Quarter Regional Sales Data
Sales were up by solid margins in all regions of the state,
according to regional sales volume derived from Multiple Listing
Service (MLS) data for Wisconsin counties. Growth rates for Q3
2005 over Q4 2004 were particularly robust in the Northern
region, increasing by a remarkable 36.5 percent. The demand for
homes, especially those in the lower price ranges, was very
strong. Also strong were the South Central and Southeast
regions, which grew at 9.2 percent and 10.6 percent respectively
over the period. The Northeast region experienced increased home
sales of 8.2 percent, whereas the Western region increased 5.4
percent. Finally, the Central region grew at 2.6 percent over
the Q3 2004 to Q3 2005 period.
Existing home sales in the Northern region of the state were
extremely strong, with sales up 36.5 percent in the third
quarter of 2005 as compared to the same quarter last year. Sales
in this region are being fueled in large part by the strong
second-home market in the northern part of the state, as many of
these homes are in the lower ranges of the overall distribution
of prices. While Florence County experienced an eight-fold
increase in sales, this was based on volume below 10 units in Q3
2005. However, two counties more than doubled their sales, and
these increases were on larger initial volume. Sales in Iron
County increased 175 percent (i.e., from 20 to 55 units sold),
and sales in Price County grew by 105.8 percent (i.e., from 52
to 107 units sold). Both of these counties had substantially
more sales in the lower ranges of the price distribution in this
quarter as compared to the same quarter last year. Also strong
were Forest County (+92.3 percent), Ashland and Bayfield
counties, which are combined for reporting purposes (+73.9
percent), and Vilas County, which grew by 73.4 percent, adding
146 additional sales in Q3 2005 as compared to Q3 2004. Another
relatively large county in the region that grew substantially
was Oneida County, which was up 64.1 percent, adding 175
additional sales in the quarter. Langlade County was up 66.7
percent, Barron County grew by 28.2 percent, Burnett County
increased 20.5 percent, and Lincoln County rose 18.5 percent
over the period. Rusk County grew more modestly (+5.2 percent)
and there were a number of counties that saw their sales volume
decline. These include Polk County (-4.3 percent), Sawyer County
(-4.6 percent), Washburn County (-4.9 percent), Douglas County
(-13.5 percent) and Taylor County (-22.7 percent).
Home sales in the Southeast region of the state were up 10.6
percent in the third quarter of 2005 as compared to that same
quarter last year. The strongest growth was seen in Washington
County, where home sales rose 24.8 percent over the period,
followed closely by Ozaukee County, which grew at a 20 percent
pace. Also experiencing double-digit growth was Waukesha County,
which increased 15.1 percent, and Sheboygan County, which
advanced 14.9 percent in Q3 2005 as compared to Q3 2004. The two
counties south of Milwaukee grew at a similar pace with Kenosha
County up by 11 percent and Racine County increasing 10.4
percent. Finally, Milwaukee County experienced solid growth
(+5.8 percent), as did Walworth County (+ 4.3 percent).
The South Central region also experienced very solid home
sales, with the region up 9.2 percent over the third quarter of
2004. Indeed, all but one county experienced growth and three
counties saw their volume of existing home sales rise more than
20 percent. Sales in Green County were up 28.1 percent in Q3
2005 over the same quarter last year, whereas home sales
increased 23.6 percent in Rock County and 20.8 percent in
Jefferson County. Almost as strong was Sauk County, which grew
at 17.3 percent over the period. More moderate growth occurred
in Columbia County (+6.4 percent) and Dane County (+4.1
percent). The only county that saw any reduction in sales volume
was Dodge County, where sales were off their 2004 Q3 pace by 4.4
percent, although this reflects only nine fewer homes sold.
The Northeast region grew by a solid 8.2 percent in Q3 2005
as compared to Q3 2004. Within the region, most counties
experienced growth, with numerous counties up substantially.
Coastal counties in the region were especially strong, with
Kewaunee County up a robust 24.1 percent; Manitowoc County
growing at 16.6 percent; Door County increasing 13.3 percent;
and Brown County up 12.7 percent. Also growing at a double-digit
pace was Outagamie County, which increased 16.4 percent, and
Shawano County, which advanced 14.4 percent over Q3 2004.
Marinette County grew 4.6 percent, whereas Winnebago County
increased by 4.1 percent, and Menominee County was unchanged.
Most of the counties that experienced a reduction in sales
volume were only slightly off their Q3 2004 pace. Calumet County
was down -0.8 percent, whereas Fond du Lac County dropped -1
percent, Oconto County fell 1.6 percent and Waupaca was down 2.3
percent. It should be noted that collectively, these four
counties sold just 10 fewer homes in the third quarter of this
year as compared to the same quarter last year. Down more
substantially was Green Lake County (-8.3 percent). This
reduction was likely driven in part by the substantial increase
in median prices (+25.7 percent) in the county over the period.
In the Western region of the state, home sales grew 5.4
percent in the third quarter of 2005 compared to that same
quarter in 2004. Within the region, most areas experienced very
strong growth. Specifically, Pierce County, which is a suburban
county of Minneapolis, grew at 46.7 percent on solid sales
volume, whereas the more rural counties of Buffalo, Pepin and
Trempeleau, which are combined for reporting purposes, increased
at 42.9 percent on more moderate volume. Also up by healthy
margins were Dunn County (+18.8 percent) and Chippewa County
(+10.8 percent). Two of the more urban counties in the region
were essentially unchanged from their strong Q3 2004 levels. La
Crosse County was down 0.8 percent, and Eau Claire County
declined 1 percent. The only county to record a more substantial
reduction in sales volume was St. Croix County, another county
on the eastern fringe of Minneapolis. Here, the sales volume was
off its third quarter 2004 pace by 4.7 percent, although this
only represents a reduction of 19 homes sold in the quarter.
The Central region of the state had sales increase 2.6 percent
in Q3 of 2005 as compared to Q3 of 2004. Within the region most
counties experienced growth. The strongest growth was seen in
Portage County, which increased 25.7 percent on solid sales
volume (i.e., sales increased by 54 homes sold). Clark County
was also up by a healthy margin (+23.1 percent), but on much
more modest sales volume. Also up were Adams County (+5 percent)
and Marathon County, the largest county in the region (+2
percent). Two counties saw their sales volume drop.
Specifically, Waushara County dropped 6.7 percent on modest
volume, and Wood County fell more substantially (-13.5 percent)
on more substantial sales volume.
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 the third quarter of 2004, median home prices increased 7.4
percent to $166,000, with all but one region experiencing median
price appreciation. "These figures show that housing continues
to be a superb investment for Wisconsin residents, and it
remains an excellent hedge against inflation," said WRA
President William Malkasian. "Even with this growth in home
prices, there is no evidence to suggest a housing bubble in
Wisconsin," said Malkasian, noting that housing is not like
other financial assets that can be bought and sold quickly on
speculation. "While housing has appreciated nicely over the last
decade, low mortgage rates have kept monthly mortgage payments
in line with income growth. And with inflation under control,
there is no reason to believe that mortgage rates will increase
substantially in the foreseeable future," he said.
Median prices in the Southeast region grew at a solid 8.5
percent to $182,200. The strongest median price appreciation was
in Kenosha County, which saw prices rise 14 percent to $173,300.
Similarly, Racine County experienced an increase in its median
home prices of 11.6 percent to $158,500. Interestingly, both of
these counties also experienced double-digit increases in home
sales, suggesting that very strong demand is fueling these
increases. Also strong was Walworth County, where prices
increased 10.6 percent to $188,000, followed by Milwaukee County
(+8.9 percent to $158,700). More moderate appreciation in median
home prices was seen in three counties. Specifically, Waukesha
County was up 5.5 percent to $258,800; Sheboygan County
increased 5.2 percent to $134,100; and Washington County median
prices rose 5.1 percent to $206,800. Finally, Ozaukee County
experienced very minor growth in median prices, with prices up
just 0.7 percent to $239,100, although it should be noted that
this was accompanied by home sales that were up significantly in
the county (+20 percent), suggesting that buyers viewed these
homes as a solid value.
Median home sale prices grew at a healthy 7 percent to
$138,300 in the Northeast region in the third quarter of 2005 as
compared to that quarter in 2004. Especially strong was Green
Lake County, where median prices advanced 25.7 percent to
$132,900 although as noted earlier, this may well have dampened
the sales volume for the quarter (i.e., sales were down 8.3
percent). Median prices were up 14.6 percent to $250,000 in Door
County, even as sales volume rose 13.3 percent. These strong
demand conditions make Door County second only to Waukesha
County in the state in terms of its median price level.
Likewise, median home sale prices grew 13.8 percent to $96,700
in Kewaunee County, where sales volume rose over 24 percent. The
median price rose 12.7 percent to $138,500 in Oconto County and
it was up 11.2 percent to $94,000 in Marinette County. Solid
home price appreciation was also seen in several other counties
in the region. Median prices in Calumet County were up 9.9
percent to $164,200; they grew 7.8 percent to $128,000 in
Winnebago County; and they increased 7.7 percent in Outagamie
County to $140,000. Also up were Brown County (+6.3 percent to
$153,700); Fond du Lac County (+5.9 percent to $125,500); and
Waupaca County (+1.8 percent to $112,700). However, median
prices fell slightly in Manitowoc County (-4.4 percent to
$94,400) and more substantially in Shawano County (-9.1 percent
to $100,000). In both of the counties where median prices fell,
home sales volume was up by double-digits.
The Central region of the state saw its median sales prices
rise 5.8 percent to $125,000 in the third quarter of 2005 when
compared with the third quarter of 2004. Within the region there
was some variation, with prices rising substantially in some
counties and price increases more moderate in others. The
strongest median price appreciation was seen in Waushara County,
which increased 18.2 percent to $130,000. These price increases
may well have contributed to the 6.7 percent reduction in sales
that occurred in the county. Likewise, Wood County saw its
prices rise 8 percent to $94,300 and its sales volume also
dropped somewhat (-13.5 percent). In contrast, the 14.7 percent
increase in Clark County, which lifted their median price to
$86,000, was accompanied by a 23 percent increase in sales, and
median prices rose 5.7 percent to $136,900 in Portage County
even as their sales increased 25.7 percent. These positive
relationships between price growth and sales growth suggest that
demand is outstripping the existing inventories in these
counties, which is driving prices higher. Median prices in
Marathon County increased 5.6 percent to $134,700, and they
increased 0.9 percent to $117,100 in Adams County.
The South Central region experienced a solid 4.8 percent
increase in median sale prices to $180,000. Comparing Q3 2005
with Q3 2004, Green County saw its median prices rise 12.5
percent to $135,000 even as sales volume rose nearly 30 percent.
This is an indication that demand conditions in the county are
outpacing the existing supply, which is fueling the growth in
prices. Also strong was Dodge County, where median prices rose
11.3 percent to $132,600. In contrast to Green County, the price
appreciation in Dodge County appears to have had a moderating
impact on home sales, which were down slightly (-.4 percent).
Three counties experienced moderate price growth, with Rock
County up 7.3 percent to $128,700; Dane County increasing 5.5
percent to $210,900; and Jefferson County up 5.3 percent to
$163,600. Median prices in Columbia County were up 1.9 percent
to $151,400 and dropped slightly (-1.1 percent to $158,200) in
Sauk County.
Likewise, the Western region of the state experienced healthy
median price appreciation, with prices rising 4.8 percent to
$155,400. The combined Buffalo, Pepin and Trempeleau counties
grew at 16.5 percent to $110,000, even as its sales volume
spiked by nearly 43 percent. This suggests that very strong
demand conditions are fueling these price increases. A similar
pattern was seen in Dunn County, where median prices in the
third quarter of 2005 were up over that same quarter last year
by 8.2 percent to $145,300, and again its sales volume increased
substantially (+18.8 percent). In contrast, the increase in
median prices in St. Croix County (+8.7 percent to $209,100),
which is just east of Minneapolis, appears to have dampened
sales in that county as sales were uncharacteristically flat in
the third quarter. Modest growth in median prices was seen in
several counties. LaCrosse County increased 4.2 percent to
$138,900; Chippewa County grew by 4 percent to $126,200; Pierce
County was up 3.7 percent to $191,200; and Eau Claire County
increased 1.5 percent to $135,700.
The only region of the state to see median prices fall,
albeit by a slight margin, was the Northern region, where median
prices fell 3.1 percent to $135,600 in the third quarter of 2005
as compared to that same quarter last year. While it is possible
that there is some discounting of homes taking place in the
region, it is more likely the case that the mix of homes changed
over the period. Turning to the individual counties, five areas
had their median prices raise by double-digits. Median prices
rose 36.1 percent to $114,300 in Lincoln County; they were up
27.7 percent to $131,700 in the combined Ashland/Bayfield
counties; and they increased nearly as much (+27 percent to
$185,700) in Washburn County. In Lincoln County and the
Ashland/Bayfield area, these price increases were accompanied by
strong growth in sales volume suggesting robust demand
conditions in those counties. Comparing Q3 2005 with Q3 2004,
median prices in Rusk County were up 23.2 percent to $106,200,
and increased 17.5 percent to $176,200 in Sawyer County. Healthy
growth was also seen in Burnett County (+11.1 percent to
$168,900) as well as Taylor County, where median home prices
rose 8.4 percent to $93,700. Prices were up moderately in Polk
County (+3.6 percent to $168,000) and also in Barron County
(+2.1 percent to $126,200). However, there were numerous
counties where median prices fell over the period, and in some
cases they were down substantially. These include Price County
(-9.7 percent to $70,000); Langlade County (-15.9 percent to
$75,700); Oneida County (-16.7 percent to $120,000); Douglas
County (-19 percent to $115,000); and Vilas County (-23.1
percent to $166,700). The most extreme reductions in median
prices were in Forest County, where they fell 40.7 percent to
$112,000, and in Iron County, where the median price plummeted
61.9 percent to $68,600.
The REALTORS® point out that it is important to put these
price reductions in the appropriate context. Malkasian noted,
"Areas where median prices have fallen are not experiencing a
countywide bursting of any price bubble like some have
suggested. On the contrary, the Northern region's real estate
market is robust. Rather, it is much more likely that the mix of
homes that sold in the third quarter of 2005 is fundamentally
different from the mix that sold during the third quarter of
2004. Specifically, Malkasian said that in many of the counties
that experienced substantial reductions in their median prices
there was a significant increase in the number of homes selling
in the lowest ranges of the price distribution. "This drives the
median home price down, but the median homes selling in these
two periods are qualitatively different," he said.
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.
Q3 comparison from 2004 and 2005 Spreadsheet
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