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Saturday, September 23, 2017

Home Sales and Prices Increase as Summer Housing Market Winds Down

MADISON — Despite low inventories of houses on the market, both home sales and median prices
finished the summer ahead of last year, according to the most recent analysis of the existing housing market by the Wisconsin Realtors Association (WRA).

Home sales in August set a record, running slightly ahead of sales last August by 0.6 percent, making it the strongest August for home sales since the WRA recalibrated its data collection methods in 2005. Year-to-date sales are also at their highest level, with 55,588 homes sold between January and August this year.

Locally, median prices are up 12.3 percent in August of 2017 compared to 2016 in Pierce County ($214,450 to $191,000) and down slightly in St. Croix County ($225,000 to $228,000). Home sales in both counties are down from last year as 66 homes sold in August of this year compared to 69 last year in Pierce County and 177 to 201 in St. Croix from 2016 to '17

Tight inventories have put strong upward pressure on the median price, which rose 7.1 percent above the August 2016 level to $182,000. This pattern has persisted throughout the year, with prices up 6.1 percent since January as compared to the
first eight months of 2016.

“The traditional summer housing market typically starts in May and runs through August, and this year was a good summer for home sales,” said WRA chairman Peter Sveum. “But sales would have been even stronger if we had more homes available for sale.”

The inventory problem that has hindered sales all year continued in August, with just 5.7 months of
available supply statewide. Indeed,at just 38,640 homes available for sale, the number of homes on the market was 14.8 percent lower than August 2016.

“The real challenge continues to be in the cities, where inventories are really tight,” said Sveum.

For the 26 metropolitan counties in Wisconsin, there are just 4.3 months of supply, which means homes move very quickly when they come on the market. The average number of days that a property remains on the market after being listed dropped to just 68 days in August, down from 82 days a year ago.

“The good news is that the Wisconsin economy is strong and growing, but over the last year, that’s been forcing prices up at a rate well above inflation,” said WRA President and CEO Michael Theo.

The annual rate of inflation derived from the U.S. Consumer Price Index (CPI) ticked up slightly in the beginning of the year, but it has settled into the range of 1.6 percent to 1.9 percent the last four months. In contrast, the annual pace of median home price appreciation has been at least 5.5 percent for all of 2017, and in August, prices were 7.1 percent higher than August 2016.

“Taking a longer view, housing as an asset has been a good hedge against inflation since emerging from the recession,” said Theo.

Compared to August 2009, the CPI rose 13.7 percent, whereas median home prices in the state rose 17.5 percent over the period between August 2009 and August 2017.

"Housing is typically the largest component of household wealth, so this is welcome news for owners,” said Theo. He noted that it is also good news for those owners who find themselves in a position to sell. “Sellers can get top dollar for their homes when they list them; and quality properties, especially those in the cities, will move quickly once they are listed,” said Theo.

Even considering recent price growth, housing remains remarkably affordable for buyers in Wisconsin. The Wisconsin Housing Affordability Index shows the percent of a median-priced home that a buyer with a median family income in the state, a 20 percent down-payment and the remaining balance financed with a 30-year fixed-rate mortgage can afford to buy.

“A year ago, that index stood at 228, and while lower this year, it still indicates a qualified buyer can afford to buy 211 percent of the median-priced home,” said Theo.

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