Housing Bubble

Wisconsin housing market outpaces region & nation in Q1

May 23, 2003

Madison - Historically low mortgage rates topped stagnate job growth and war-jittery financial markets to boost residential home sales in Wisconsin nearly 7% in the first quarter of 2003, according to the Wisconsin REALTORS® Association (WRA).

According to the latest REALTORS'® figures, a seasonally adjusted total of 29,175 homes were sold in the state between January and March of 2003. This 6.9% growth rate outpaced both the nation, (which grew at 2.2%), and the Midwest region (which only grew at 1%) over the same period.

"While some parts of the country have experienced declines in home sales, the Wisconsin market remains incredibly robust," said Robert Weber, Chairman of the Board for the WRA. "The market is being driven in large part by low mortgage rates which averaged 5.8% for a 30 year fixed rate mortgage during the first quarter," Weber said. "This trend is continuing with the news last week that 30 year fixed rates dropped to 5.5% and 15 year rates fell to 4.8%."

Weber suggested that mortgage rates will likely remain low for the foreseeable future as inflationary pressures remain in check. "We continue to be cautiously optimistic that the economy is improving," said Weber. He pointed to an improved Consumer Confidence index for May as well as higher new orders in manufacturing as promising economic signs.

Multiple Listing Service (MLS) data for Wisconsin counties shows that all areas of the state grew over their first quarter levels last year. The strongest regional growth was in the North region where home sales continued their trend of double-digit growth, with sales up 17% over Q1 2002. Sales in Price county expanded by 22 units, but given its relatively small base in 2002, this represented a growth rate of 275%. Lincoln county also grew substantially this quarter (+74.3%) as did Vilas (+69%), Washburn (+47.4%) and Sawyer (+27.3%) counties. More moderate growth was seen in Langlade which grew +12.1% and Oneida county which expanded +7.2%. Not all counties in the region grew however. For example, Rusk county dropped 19%, both Burnett and Douglas counties fell about 15% and Ashland and Bayfield counties which are only reported in combined terms, fell 14.3%. Note that all of these declines are based on 2002 volumes that were less than 35 units. Finally, Polk county slid 9.3% on somewhat higher volumes in Q1 2002 (i.e., 86 units in Q1 2002)

West region

The West region was also up substantially (+15.6%) over its Q1 2002 levels. Two of the eastern suburban counties around Minneapolis both grew by more than 50% (St. Croix increased 57.6% and Pierce was up 52%). Sales in Chippewa county grew 21.7% and they were up 7% in LaCrosse county. Dunn county sales increased 4.8%. Sales figures are only reported in combined fashion for Buffalo, Pepin and Trempeleau counties. Collectively, sales activity in these three counties were up 15.8% over the first quarter last year. Only Eau Claire county contracted, falling by 6.8%.

Northeast region

The Northeast region grew at 14.1% in the first quarter of 2003 as compared to the same period a year ago. Within the region, activity in Kewaunee county more than doubled (up 155.5%), although this is based on relatively low volume in Q1 2002. Marinette county grew by 40% and both Calumet and Door counties were up more than 35% (Door was up 38.2% and Calumet increased 36.3%). Also advancing by double-digits were Green Lake county (+23.5%), Winnebago county (+18.6%), Brown county (+17.9%) and Oconto county (17.6%). Growing much more moderately were Shawano county which increased just 1.9% over Q1 2002, and Waupaca county which was up 1.1%. Sales in Fond du Lac county were flat (-0.7%) and sales in Outagamie county were down 2.9%.

Central region

The Central region in the state grew at 10.6% when compared to Q1 2002. Two small counties reported significant increases (Clark county up 175% and Adams county up 100%), but these growth rates were off of base activity levels that were below 5 units in Q1 2002. Waushara county also grew at a healthy pace (+39.4%). Solid growth in sales volume occurred in Portage county (+9.1%) and Wood County (+6.9%). Marathon county, which is the largest county in the region was up 4% in Q1 2003 over the same quarter last year.

South Central region

The South Central region was up a more moderate 6.8%. However, several counties were up by double-digits. Specifically, Jefferson county increased 17.1%; Rock county grew at 13% over Q1 2002 and Dodge county which was up by nearly the same margin, at 12.9%. Both Dane and Sauk counties advanced 6.6% over their Q1 2002 levels. Green county dropped 1.4%, and Columbia county slid substantially, falling 20.1%.

Southeastern region

Finally, the slowest 2003 Q1 growth in the state was in Southeastern Wisconsin, which was still up 4.8% over last year. The growth rates for individual counties were mixed. The strongest growth was in Sheboygan county, which was up 21.7%. Washington county also grew at a robust pace, increasing 16.7%, Ozaukee county was up 10% and sales in Milwaukee county were up 9.3%. Waukesha county expanded 4.3% whereas Walworth county was only up about 1.5% over Q1 2002. In contrast, the two counties south of the Milwaukee metropolitan area saw some contraction of sales volume, with Kenosha county down 7%, and Racine county down 15.4% when compared to the same quarter in 2002.

Sales

Home prices

Home prices in the first quarter of the year experienced healthy growth, increasing at more than twice the rate of inflation. As compared to Q1 2002, median home prices were up 7.2% to $136,900. "While prices have increased, Wisconsin's housing remains quite affordable overall," said WRA President Bill Malkasian. He added, "Housing remains a great asset and a solid hedge against inflation." Malkasian pointed to the latest study of housing affordability conducted by the National Association of REALTORS (which showed the Midwest to have the most affordable housing of all regions in the U.S.)

Median housing prices rose between 5.4% and 9.8% in the various regions of the state in Q1 2003 as compared to Q1 2002. The strongest regional appreciation rate was the West region which experienced a 9.8% growth of median prices to $133,300. Within the region, Dunn county was up substantially (+30.4% to $140,000) on solid volume for the quarter. Likewise, the Minneapolis suburban counties were also up with St. Croix county increasing 9.8% to $175,700 and Pierce county up 6.3% to $166,200. Chippewa county was also up 7.8% to $101,000 and LaCrosse county grew 5.2% to $116,400 in Q1 2003 over the same quarter last year. Eau Claire county was flat (+0.4% to $114,100) and prices in the combined Buffalo, Trempeleau and Pepin counties fell slightly (-2.2% to $76,400).

Central region

The Central Wisconsin region median prices increased 8.6% from Q1 2002 to Q1 2003 to $108,600. Wood county prices rose most significantly, increasing 28.5% to $100,000. Likewise, Portage county also experienced substantial price increases over the period, with median prices up 21.1% to $118,700. Median prices in Marathon county increased 6.9% to $115,400 whereas they fell in Waushara county by a sizeable 8.5% to $86,900. Note however, that this price decrease was accompanied by a large increase in sales volume (+39.4%) in Waushara county.

Southeast region

The Southeast region also experienced healthy price appreciation over the past year, with median prices up 8.5% to $143,600 in the first quarter. The strongest growth was seen in Walworth county (+12.3% to $144,000) although two counties, Sheboygan and Washington had median prices grow nearly as fast. Sheboygan county prices were up 11.6% to $112,900 over the past year, and Washington county median prices appreciated 11.2% to $170,000 for the period. Milwaukee county experienced an 8.3% increase in median prices to $121,300 whereas Kenosha county prices rose 6.2% to $136,200. Similarly, Waukesha county saw median prices increase 6.1% to $202,600. Slightly slower price appreciation occurred in Racine county which had prices increase 4.6% to $120,000. Only Ozaukee county failed to increase appreciably, with prices up only slightly from Q1 2002 to Q1 2003 (+0.6% to $210,700).

South Central region

The South Central region experienced median housing price appreciation of 7.3% to $151,700. Green county which saw a slight decline in home sales, experienced the strongest growth in home prices with median prices rising 24.5% to $105,800. The rest of the region had more modest increases in median prices. Dane county housing prices were up 7.3% to $177,800 as compared to Q1 2002, and median prices in Jefferson county were up 6.2% to $138,000. Dodge county prices rose 3.3% to $112,900 over the same period. Columbia county grew 2.2% to $130,900 whereas Sauk county was virtually unchanged (+0.2% to $125,500) as was Rock county (-0.8% to $102,500).

Northeast region

Median prices in the Northeast region increased 6.3% (Q1 2003 as compared to Q1 2002) to $120,000. The county with the largest median price increase was Door county, which was up 36.7% to $168,600. The other county increases were more moderate. Outagamie county median prices grew 9.5% to $126,700 and Winnebago county increased 6.6% to $113,700. Median prices in Oconto county grew 5.3% to $114,000; they were up 3.6% to $151,400 in Calumet county and median prices rose 3.5% to $128,400 in Brown county. Median price appreciation was modest in both Marinette county (+2.1% to $68,700) and in Green Lake county (+1.4% to $88,700) over the period. Median price actually fell in two counties. Specifically, Waupaca was down 2.7% to $86,700, and Shawano declined 4.2% to $86,200.

North region

Finally, the North region experienced median price increases of 5.4% to $113,300 in the first quarter 2003 as compared to the same quarter one year earlier. This region was also the most volatile. The strongest median price growth was in Douglas county (+37.5% to $110,000) followed by Oneida county (+29% to $133,300). Also experiencing robust median price appreciation were Langlade county which was up 17.6% to $80,800, and Barron county which grew 15.3% to $100,000. The median prices in the first quarter were up 4.3% to $136,200 in Polk county and 2.7% to $131,100 in Washburn county. However, there were several counties in this region that experienced price declines, albeit on relatively low volumes in many cases. Specifically, Lincoln county which experienced a substantial increase in sales volume, saw median prices slip slightly (-1% to $78,500) and they fell 6.9% to $61,700 in Rusk county. More significant declines in median prices were found in the counties of Vilas (-14.1% to $150,000), Sawyer (-22.8% to $110,000) and Burnett (-23.1% to $100,000). Lastly, the combined Ashland and Bayfield counties fell 33.3% to $100,000.

Median Housing Price

 

Source: Wisconsin REALTORS® Association