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Friday, October 27, 2017

Record home sales throughout state in thrid quarter as prices continue to rise

MADISON -  Wisconsin sold 63,398 homes in the first nine months of 2017, slightly beating the
record pace established in the third quarter last year, according to the most recent analysis of the existing housing market by the Wisconsin Realtors Association (WRA).

Through three quarters, sales were up slightly, rising 0.4 percent compared to that same period in 2016. Median prices for the first nine months of the year rose 6 percent to $174,900, compared to the January-through-September period of 2016. Very tight inventories have constrained sales activity and pushed up prices throughout the year and also in the month of September. September sales were down slightly, falling 1.2 percent below September 2016, but median prices rose 4.8 percent to $175,000 over that period.

Locally,  home prices in Sept. 2017 in Pierce County are $208,255. In St. Croix prices are at $228,000 and in Pepin they are at $154,000, all up from 2016 numbers between 3 and 10 percent.
Home sales from this year to last year were down in Pierce, 50 in 2017 to 52 in 2016 but way up in St. Croix (173-161) and Pepin (18 to 14).

“This is a solid economy that under normal circumstances would fuel both home prices and home sales,but these are not normal times, at least on the supply side,”said Peter Sveum, WRA board chairman.

Although median home prices in Wisconsin have increased 17.5 percent since September 2014, new
listings of existing homes continued to fall in September, and year to date, they are down 2.6 percent
relative to the first nine months of 2016.

“The statewide inventory picture looks okay at 5.5 months of available supply, but that hides the significant variability within the state,”said Sveum.

For example, the North region had 10.9 months of available supply in September, and its sales were actually up 7.6 percent year to date. Likewise, the Central region had 6.7 months of supply and saw sales grow 3.9 percent for the first nine months of 2017, relative to that period in 2016.

“If you’re looking for a cabin or vacation home in the northern regions of the state, this is a great time to buy, but supply is very tight in he more urban regions, which is keeping sales down in those areas,”Sveum said.

The Northeast region had six months of supply in September, and year-to-date sales were down 0.4 percent; home sales dropped 0.2 percent year to date in the West region, which had 4.8 months of supply; the Southeast region had 4.3 months of supply and sales were down 0.1 percent year to date; and sales fell 1.8 percent year to date in the South Central region where there was just 4.4 months of supply. Sveum speculated about several reasons why owners are less motivated to sell even when they can get top dollar for their homes.

“Retirees may have decided to age in place now that their homes are paid off, and pre-retirement
owners may be reluctant to sell because they would have to buy or rent in the same, low inventory
market,” said Sveum.

“Strong demand and tight supply continues to put upward pressure on home prices,”said WRA President and CEO Michael Theo.

Every region of the state experienced strong price appreciation through the first nine months, relative to that same time period in 2016. The growth in median prices ranged from four percent in the Central region to 7.7 percent in the South Central region over that period. Housing affordability dropped 6 percent in September compared to September 2016.

“Our state still has very affordable housing, due in part to very favorable mortgage rates,”said Theo.

The Wisconsin Housing Affordability Index shows the fraction of the median-priced home that a buyer with median family income in the state can afford to buy, assuming a 20 percent down-payment and the remaining balance financed with a 30-year fixed-rate mortgage. The index indicates that a qualified buyer could afford to buy 218 percent of the median-priced home in September.

Theo suggests tight supplies will remain a market reality for the next six to 12 months.

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