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Housing Market Solid Despite Decline in Sales
Date: November 20, 2006
For More Information Contact: David E. Clark, Economist
C3 Statistical Solutions Inc.
Office phone: 414-803-6537
Madison - Home sales in Wisconsin have dropped from
historic highs but still outpace the Midwest region and the
nation as a whole, according to the latest analysis by the
Wisconsin REALTORS® Association (WRA). The REALTORS® showed
sales of existing homes in Wisconsin declining 7.5 percent in
the third quarter of 2006 as compared to the third quarter of
2005 with a seasonally adjusted total of 29,425 units selling
during the third quarter of this year. In contrast, the Midwest
region was down 11.8 percent, and the nation was off its Q3
2005 pace by 12.7 percent.
“Our housing
market remains fundamentally solid and we can expect a strong
finish for 2006 and a strong beginning for 2007,” said WRA
Chairman Roger Rushman. “That’s good news not only for our
economy but for Wisconsin families and businesses. We have to
remember we’re comparing these numbers to historically high
sales volumes of the past few years.”
Rushman said
the foundation of the market is both strong and sustainable.
“The good news is that the statewide economy remains healthy
with the seasonally adjusted unemployment rate at 4.7 percent
in September, and the state has added 46,000 jobs over the last
year,” said Rushman. While noting that the 30-year conventional
mortgage rate was nearly a percent higher in the third quarter
of 2006 as compared to the third quarter of 2005, Rushman
suggested there is room for optimism on that front as well.
“The Fed has stopped raising short term rates as inflationary
pressures have eased, and mortgage rates have actually dropped
nearly 0.5 percent since July,” said Rushman.
Third Quarter Regional Sales
Data
Third
quarter home sales fell from the record levels established in
2005 in all regions of the state. Specifically, existing home
sales were down between 6.7 percent and 18.4 percent, with all
but two regions falling by a double-digit margin. The decline
in the Northeast region was 6.7 percent; in the Central region
9.6 percent; and in the West 11.6 percent. Home sales volume in
the Southeast region fell 13.6 percent and home sales in the
South Central region dropped 15.1 percent. Finally, the
Northern region slid 18.4 percent over the period.
The smallest
regional decline in sales volume was in the Northeast region,
where existing home sales fell 6.7 percent in the third quarter
of 2006 as compared to that same quarter in 2005. Within the
region, a number of counties saw their home sales grow. Most
dramatic was Menominee County, which increased 66.7 percent,
although this was on very low volume. However, on more solid
volume, Marinette County was up 21.9 percent, Oconto County
increased 8.3 percent and Green Lake County rose 7.1 percent.
Waupaca County was up 3 percent and Calumet County was
essentially flat (+0.8 percent). Down modestly was Manitowoc
County (-4.5 percent), followed by Brown County (-5.7 percent),
Winnebago County (-6.3 percent) and Kewaunee County (-8.3
percent). Home sale reductions in Q3 2006 as compared to the
levels set in Q3 2005 were more substantial in Fond du Lac
County (-12.7 percent), Shawano County (-15.1 percent),
Outagamie County (-16.3), and Door County (-20.2 percent).
The Central
region, which has led the state in sales volume growth in the
first two quarters of 2006, saw its sales fall 9.6 percent in
Q3 2006 as compared to Q3 2005. The county with the strongest
growth was Adams County, where sales were up 23.8 percent,
although that was based on just five additional sales for the
quarter. One of the larger counties in the region, Wood County,
rose slightly (2.7 percent), whereas the remaining counties
were substantially off their Q3 2005 pace. Portage County fell
11 percent on initial volume of 264 units, Waushara County
dropped 14.3 percent from just under 100 sales in Q3 2005, and
the largest county in the region, Marathon County, saw its
sales volume drop 15.1 percent. The biggest slide was in Clark
County, where existing home sales fell 21.9 percent, but that
resulted from just seven fewer sales in Q3 2006 as compared to
the same quarter in 2005.
The West
region fell 11.6 percent over the third quarter 2005 to third
quarter 2006 period and all but one county in the region
reported a decline. St. Croix County was up slightly (+1
percent), which is notable given that this county in the
Minneapolis metropolitan area has been red hot in recent years.
While La Crosse County declined just 5.1 percent, the other
counties were off their Q3 2005 pace by double digits.
Specifically, the counties of Buffalo, Trempealeau and Pepin,
which are combined for reporting purposes, dropped 11.4 percent
on modest volume, whereas Eau Claire County fell 11.5 percent
on more sizeable initial sales volume. Pierce County, which
also borders Minneapolis, fell 14 percent on solid volume
whereas two other counties experienced more substantial
reductions. Chippewa County dropped 29.8 percent, whereas Dunn
County slid 32.9 percent over the period.
The
Southeast region dropped 13.6 percent over the period between
Q3 2005 and Q3 2006 with all counties declining between 10 and
22 percent. Milwaukee County, which is the largest county in
the state, dropped 10.2 percent, whereas the second largest
county in the Milwaukee metro area, Waukesha County, fell 12.2
percent. Sheboygan County was down by 13.6 percent and
similarly, Washington County was off its Q3 2005 pace by 13.9
percent. In the middle of the pack was Kenosha County, which
dropped 15.2 percent, whereas Walworth County was down by 18.6
percent for the period. Finally, two counties experienced
reductions in existing home sales in Q3 2006 that were more
than 20 percent lower than the levels set in the same quarter
in 2005. They were Ozaukee County, which fell 20.1 percent, and
Racine County, which dropped 21.7 percent.
The South
Central region saw its volume of existing homes fall 15.1
percent from Q3 2005 to Q3 2006. Within the region, all
counties were down from their Q3 2005 levels, although there
was considerable volatility. While both Sauk County (-0.9
percent) and Green County (-2.4 percent) changed very little,
larger reductions were seen in Dodge County, which fell 6.1
percent, and Rock County, which declined 8.2 percent. Even
larger reductions were found elsewhere. The most populous
county in the region, Dane County, fell a substantial 18
percent; Columbia County was down 21.2 percent; and in
Jefferson County, which has had very strong growth in recent
years, sales dropped 26.4 percent.
Finally, the
North region was down most significantly, with Q3 2006 existing
home volume falling 18.4 percent as compared to the Q3 2005
levels. Over the last several quarters, there has been
significant variability between counties in the region, with
double-digit growth in some counties and double-digit declines
in others not uncommon in the same quarter. Given the heavy
concentration of second homes, this volatility is somewhat
expected. While only two counties saw positive growth, the
increase was substantial in Lincoln County, which rose 43.8
percent on initial volume of 64 units in Q3 2005. Forest County
was up 10 percent, although this was based on just five
additional units sold, whereas Taylor County was unchanged;
Douglas County was down 3.1 percent; and Langlade County fell
5.6 percent, all on modest initial sales volume. The remaining
reductions in unit sales volume were more significant. Barron
County fell 11.5 percent; Burnett County was down 12.5 percent;
Iron County declined 14.5 percent; Ashland and Bayfield
counties, which are combined for reporting purposes, were down
17.5 percent; and Polk County, which borders Minneapolis,
dropped 17.8 percent. Finally, numerous counties, some of which
had significant volume in Q3 2005, slid 20 percent or more.
Washburn County was off its Q3 2005 pace by 21.6 percent,
whereas Vilas County dropped 22 percent; Oneida County fell
26.6 percent; Price County declined 29 percent; Sawyer County
slid 32 percent; and Rusk County fell 37.7 percent. Finally,
Florence County reported a drop in sales volume of 75 percent,
however that is on initial volume of just eight units.
Third Quarter Median Housing
Price Data
Median home
prices for the third quarter were unchanged statewide at
$166,000 as compared to their Q3 2005 values, according to the
REALTORS®’ report. “It is clear that there has been some
softening in the housing market with sales volume down in all
regions of the state, but it is a good sign that we have
maintained values over the same period,” said WRA President
William Malkasian. He further noted that moderating housing
price appreciation below the high levels we have seen over the
past four years is a welcome change that helps to maintain
affordability for those new households just entering the
housing market. “Housing accounts for roughly a third of total
family assets according to a recent Federal Reserve Bank study,
and the rise in homeownership rates nationwide has been a boon
to household wealth,” said Malkasian. He indicated that the WRA
is confident that housing will remain an affordable option for
Wisconsin households.
Median
housing prices were up 3 percent to $160,000 in the West region
in the third quarter of 2006 as compared to the third quarter
of 2005. Within the region, Chippewa County experienced the
strongest median price appreciation, with prices rising 9
percent to $137,500 over the period. Also up was Eau Claire
County, which rose 5.6 percent to $143,300, as well as St.
Croix County, which increased 2.2 percent to $213,600.
Interestingly, Chippewa and Eau Claire counties experienced
double-digit reductions in volume as compared to the third
quarter of last year, suggesting that these price increases may
have led in part to the reduction in volume. Median prices were
flat in Dunn County (+0.1 percent to $145,500) and they fell by
small margins in La Crosse County (-2.6 percent to $135,300)
and also in Pierce County (-3.2 percent to $185,000). Finally,
median prices dropped 7.1 percent to $102,200 in the combined
counties of Buffalo, Trempealeau and Pepin.
The South
Central region saw median prices increase 1.1 percent to
$182,000 over the period Q3 2005 to Q3 2006. Within the region,
all but one county experienced some median price appreciation,
and it was particularly strong in three of the counties.
Specifically, median prices in Jefferson County rose 8.5
percent to $177,500; they increased 7.7 percent to $163,100 in
Columbia County; and they grew 6.9 percent to $144,300 in Green
County. The strong price appreciation may have contributed to
the double-digit reduction in sales in Columbia and Jefferson
counties. In contrast, the median price growth in Rock County
was 2.7 percent to $132,200 and it was 1.8 percent to $214,600
in Dane County. Finally, median prices were essentially flat in
the remaining two counties that report home sales. Sauk County
median prices rose just 0.1 percent to $158,300 and they fell
0.9 percent to $131,400 in Dodge County.
The median
price of existing homes was up 1 percent to $126,200 in the
Central region of the state when comparing the third quarter of
2006 with the third quarter of 2005. For two of the small
counties in the region, the change in the median price over the
period was dramatic. In Adams County, the median price rose
62.3 percent to $190,000 and it increased 27.9 percent to
$110,000 in Clark County. Median prices may increase for two
separate reasons. First, it may be the case that the general
level of housing prices in the county has increased over the
two quarters. Second, it may be that the mix of homes that sold
in the most recent quarter was qualitatively better than the
mix that sold in the previous year. We suspect that the
majority of this median price change is due to a change in the
mix of homes that sold. In Marathon County, which is the only
metropolitan county in the region, the median price increased 3
percent to $138,800 and median prices were unchanged at
$130,000 in Waushara County. Finally, two of the larger
counties in the region experienced modest declines in their
median prices from Q3 2005 to Q3 2006. Portage County saw its
median prices fall 3.2 percent to $132,500 and Wood County
witnessed a 5.6 percent reduction to $89,000 over the period.
Median
prices were unchanged at $182,200 between Q3 2006 and that same
quarter in 2005 in the Southeast region of the state. Within
the region the evidence is mixed, with roughly half of the
counties experiencing increases in their median prices, and the
remainder either flat or experiencing modest declines. The
largest rate of appreciation was in Walworth County, where
median prices rose 6.4 percent to $200,000. This was followed
by Ozaukee County, which saw its prices increase 3.6 percent to
$247,600, and Milwaukee County, where prices grew 2.6 percent
to $162,900. Three counties were relatively flat. In Racine
County, the median price rose 0.9 percent to $160,000; it fell
0.5 percent to $172,500 in Kenosha County; and dropped 0.6
percent to $133,300 in Sheboygan County. Finally, moderate 2.2
percent reductions were seen in both Washington County, where
prices dropped to $202,300, and Waukesha County, where prices
fell to $253,100.
The most
volatile region in terms of median price fluctuation over the
past several years has been the North region, and the most
recent quarter is no exception. While overall, median prices
fell just 3.3 percent to $131,100 over the Q3 2005 to Q3 2006
period, a number of counties were up substantially, while
others saw median prices fall significantly. Given that home
sales consist of both first homes and vacation properties, such
volatility is not surprising, especially when the mix of homes
changes in a given quarter. For example, median prices in Iron
County rose 60.3 percent to $110,000; they increased 47.8
percent to $170,000 in Douglas County; and they grew 32.9
percent to $93,000 in Price County. Also up by double-digits
were Taylor County (+17.4 percent to $110,000), Washburn County
(+14.4 percent to $212,500) and Rusk County (+13 percent to
$120,000). Oneida County saw its median price increase 7.2
percent to $128,600 and prices rose 2.4 percent to $129,200 in
Barron County. In contrast, several counties experienced a
modest reduction in the median price between Q3 2005 and Q3
2006.
Specifically, median prices fell 2.3 percent to $170,000 in
Burnett County; they dropped 4.8 percent to $160,000 in Polk
County; they declined 4.9 percent to $72,000 in Langlade
County; and they fell 5.1 percent to $125,000 in the combined
Ashland/Bayfield counties. Higher median price reductions were
found in Sawyer County (-6.4 percent to $165,000), Vilas County
(-8 percent to $153,300) and Lincoln County (-10.3 percent to
$102,500). Finally, the largest median price decline was seen
in Forest County, where the median price slid 40.9 percent to
$66,200 over the period. Again, such dramatic movements in
price almost certainly reflect changes in the mix of homes that
sold over the period.
Median
prices fell 3.6 percent to $133,300 in the Northeast region of
the state between the third quarter of 2005 and the third
quarter of 2006. Most of the counties experienced very modest
changes in prices although some appreciation was in the
double-digits. Median prices in Kewaunee County were up 12.5
percent to $108,800, followed by Shawano County, which saw its
median price rise 6.7 percent to $106,700 over the period.
Numerous counties had median prices that were relatively
unchanged or slightly down over the Q3 2005 to Q3 2006 period.
They include Calumet County (+0.5 percent to $165,000), Door
County (unchanged at $250,000), Outagamie County (unchanged at
$140,000), Brown County (-1.5 percent to $151,400), Waupaca
County (-1.6 percent to $110,900) and Fond du Lac County (-1.9
percent to $123,100). Slightly higher reductions were seen in
Manitowoc County (-3.2 percent to $91,400) and Winnebago County
(-3.8 percent to $123,100). Finally median price fell more
substantially in Oconto County (-7.6 percent to $128,000), and
the largest reductions were found in Green Lake County, where
prices dropped 11.4 percent to $117,800, and in Marinette
County, where they slid 18.7 percent to $76,400 over the
period.
The
Wisconsin REALTORS® Association is one of the largest
trade associations in the state, representing over 17,000 real
estate brokers, salespeople 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.
Finally, several counties in the Western and Northern regions
were re-benchmarked by their data vendors in 2006 and thus Q2
2005 figures were also revised so as to be comparable with the
most recent quarter.
Q3 comparison from 2005 and 2006 Spreadsheet
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