WisBusiness: Wisconsin housing starts low, but starter homes selling well

By Tracy Will

For WisBusiness.com

Though recent figures show a slight uptick in Wisconsin housing starts, 2009 is on track to see fewer houses built than 2008, which was Wisconsin’s worst year in more than a decade.

“Usually the first quarter is the worst quarter of the year for housing starts and the second quarter is the best,  but we’ve seen 80 to 90 percent declines in some markets,” said Dominic Collar of MTD Marketing, a builders’ consulting firm. “It’s not good.”

Through May of this year, just 2,003 permits were issued for one and two-family housing according to figures provided by the Wisconsin Builders Association. That’s less than half as many as the 4,400 housing permits issued during the same period of 2008; a total of 8,496 permits for one- and two-family units were issued in the full year. And the 2008 number was down from the previous three years: there were 13,278 permits issued in 2007, 17,402 in 2006, and 22,016 in 2005.

One potential positive, according to the Wisconsin Realtors Association, is that Wisconsin home values have held steady and home sales were increasing for starter homes. The WRA’s Joe Murray says there still is money to be made in Wisconsin real estate.

“One of the bright spots is in the $250,000 and lower properties where we are seeing multiple bids on properties, so it’s getting better,” Murray said, adding that “ those starter houses at $250,000 and lower account for 50 percent of home sales nationally.”

“One bright spot that may be a predictor for the future is you have an economy that for all appearances has bottomed out, and that will likely increase consumer confidence.” Murray said.

“With mortgage interest rates at 5.3 and 5.5 percent, it’s not as good as the 4.7 and 4.9 earlier this year, but it’s pretty good,” Murray said.

“In Wisconsin we saw some small declines in home prices, but it hasn’t been steep. Unlike the hotter real estate markets like Florida and California, and as slow as the economy has been, we never hit the high highs they hit, but we never see the low lows either,” he said

With slower sales, the tough economy has had an impact on the number of realtors. The Wisconsin Realtors Association had as many as 18,000 members in its banner year of 2005-06.

“We are down to 15,000 this year, but we’ve seen an 84 percent renewal rate in membership since last year, and hope to see similar numbers again in 2009 for membership in 2010,” Murray said.

Wisconsin’s hottest market, according to statistics from the Multiple Listing Service, is Dane County. Permits issued for single and two-family housing increased from 62 in June of 2008 to 76 in June of 2009 – an increase of 22.6 percent.

But even Dane County hasn’t been immune from problems — only 685 homes sold in the first quarter. That compares to 985 sold in the same time span in 2008, and is roughly half of the number of homes sold in the first quarter in 2007.