CONTACT: Bill Malkasian, WRA President, (608) 345-9004, [email protected]
or David Clark, Economist, C3 Statistical Solutions and Professor of Economics, Marquette University, (414) 803-6537, [email protected]
Madison – Not surprisingly, existing home sales fell significantly in April according to data just released by the Wisconsin REALTORS® Association (WRA). Sales of existing homes fell 32.3 percent in April compared to the same month last year. The median sale price was also down 8.4 percent to $125,900 between April 2010 and April 2011.
“Nobody familiar with recent housing trends is surprised by this,” John Horning, Chairman of the WRA Board of Directors, said. Horning said the market last April was “overheated” because the terms of the federal homebuyer tax rebate program required an accepted offer by the end of April and closing by the end of June, 2010. “As a result of last years unique federal tax program, the next few months are going to be a statistical roller-coaster ride,” Horning said. He predicted the housing sales data for the next two month’s sales will pale by comparison to 2010 because buyers were rushing to close their sales last year to take advantage of the federal program. “The flip side is that third quarter sales figures for 2011 should look much stronger because sales plummeted last year after the expiration of the federal program,” Horning said.
According to the REALTORS® report, regional performance was remarkably consistent, with five of the six regions in the state seeing their sales fall between 29.8 percent and 33.6 percent between April 2010 and April 2011. Only the west region saw its home sales fall at a faster rate, dropping 41.1 percent over the period. “This suggests that sales activity in all regions was similarly distorted by the federal program,” Horning said. While median prices statewide fell 8.4 percent in April 2011 compared to that same period last year, prices varied in different regions of the state. Median prices fell just 1.8 percent in the central region, dropped 4.8 percent in the south central region, and 6.1 percent in the western part of the state over the period. Prices declined between 9.2 and 12.4 percent in the southeast, north and northeast regions of the state.
“The volatility of the sales and price data makes it difficult to discern underlying trends in the housing market,” WRA President Bill Malkasian said. “However, there have been some signs of stability in the economy.” One sign is the state unemployment rate, which has stayed at 7.4 percent throughout the first three months of the year. “While this is still high, it is well below the national rate which is currently at 9 percent,” Malkasian said. He also pointed out job growth has kept pace with the growth in the labor force. “Wisconsin added nearly 15,000 jobs this year, with over 7,500 in the relatively high-paying manufacturing sector,” he said. Malkasian also pointed out that the current low interest rates, combined with the current downward movement in home prices, makes Wisconsin housing very affordable. The Wisconsin REALTORS® Housing Affordability Index measures the percent of the median priced home that a buyer with the statewide median family income can purchase was at 236 in April, which was more than 20 points higher than this time last year. As economists begin to worry about the prospect of inflation, Malkasian said it’s important to remember that historically, housing has been a good way to hedge against the long-term impact of inflation. Inflation will hurt housing affordability by raising housing prices and mortgage interest rates so buying now is key. “The bottom line is this is an ideal time for credit-worthy buyers to get a lot of housing for their money,” Malkasian said.