State housing market posts strong gains in October
Homes sales, median prices increase

By Dwayne Butler - Freeman Staff

Nov. 18, 2014

WAUKESHA - Strong single-family home sales and growth in median prices combined to make for a robust October, the Wisconsin Realtors Association said in a analysis report released Monday.

The report said existing home sales in October were 9.6 percent higher than October 2013 while median prices were ahead 4.2 percent over the same period. Nearly 6,300 homes sold in Wisconsin in October.

“This was a strong bounce in home sales in a month, where sales activity is typically winding down as we approach winter,” said Dan Kruse, chairman of the WRA board of directors. “In fact, this is the strongest October sales we have seen since 2005 when the WRA began using the current data collection system.”

The October sales spike has closed the gap on the statewide year-to-date sales to just 2 percent below the first 10 months of 2013. Through the first nine months of 2014, sales had been 4.1 percent behind the same period a year ago.

“We’ve clearly made up some ground, bringing us close to last year’s very strong sales totals,” Kruse said.

October sales were higher in all regions of the state, with double-digit growth in the less urban regions. The North region boasted the strongest market increase with sales 29.9 percent ahead of October 2013. Two more double-digit increases were found in the Central and West regions, at 22.5 and 17.6 percent, respectively.

Sales in the heavily urbanized Southeast region, which makes up Waukesha, Milwaukee, Washington and Ozaukee counties, were ahead 1.2 percent in October 2014 compared with October 2013.

The WRA estimated that tighter inventories kept the area from recording stronger growth. The four-county Milwaukee-metropolitan area to go with Racine and Kenosha county markets had 7.9 months of inventory in October compared with 9.3 months statewide. Moreover, median price appreciation was the strongest in the Southeast region compared with other parts of the state. At $177,000, the average 2014 home price in the Milwaukee metro market is 9.4 percent ahead of the first 10 months of 2013.


Housing prices trending upward

Statewide, the average price of a home grew to $148,000 in October 2014 compared with $142,000 in October 2013. Home prices have increased 31 of the last 32 months.

Through the first 10 months of the year, home prices were 2.5 percent ahead of the pace set in 2013, which more than outpaces the annual national inflation rate. That stood at 1.7 percent as of September.

“We seem to have hit the sweet spot, with home prices growing, but not so fast that they hurt affordability,” WRA President and CEO Michael Theo said.

Meanwhile, the Wisconsin Housing Affordability Index shows the percent of the median-priced home that a household with the median family income can afford, given a 20 percent down payment financed at current mortgage rates. The October 2014 index stood at 227, which is very similar to the index value of 223 in October 2013.

Theo is optimistic about home sales over the winter. Seasonal trends suggest the best prices can be found during winter, when there are fewer transactions and fewer buyers competing for available homes. Additionally, he said mortgage rates continue to hover around 4 percent, the job outlook is promising and affordability is strong.

Home buying affordable: Real estate report

BROOKFIELD — The metro-Milwaukee area continues to offer many single-family homes that can be purchased with monthly payments that rival or beat rental payments, according to the North Shore Bank/Greater Metropolitan Association of Realtors’ Home Affordability Report.

The report, for the quarter ending Sept. 30, shows median monthly payments ranging from a low of $247 per month for a $27,000 home on the west side of Milwaukee to a payment more than 13 times higher – $3,254 – on a $655,000 home in Mequon.

Published quarterly, the report uses Metro Listing Services' data to track the current median monthly payment (principal, interest, and property taxes) for single-family homes that were purchased in three price ranges – lower end, middle market and upper end – during the previous quarter in municipalities where enough recent home sales took place to compute reliable figures.

The figures are based on the median selling price of homes sold during the previous three months in each of the three price ranges, the current average interest rate on a 30-year, fixed rate mortgage and the property tax rate in the featured community.

The analysis assumes a 20 percent down payment, which eliminates the need for mortgage insurance and results in a smaller monthly payment than lesser down payments.

Mequon ranged from a low monthly payment of $1,031 on a $204,000 home to a high of a $3,254 monthly payment on a $655,000 home. A mid-range home in Mequon, valued at $345,000, carried a $1,701 monthly payment.

Michael Kellman, a senior vice president at North Shore Bank who oversees mortgage lending, says conditions are favorable for buyers thanks to a combination of low interest rates and little price inflation.

“The current average interest rate on a 30-year, fixed-rate mortgage is 4 percent and the average home sale price in the metro area rose by just 1.1 percent over the past year,” he said. “It’s a very attractive environment for homebuyers.”

Shorewest real estate agent Beth Jaworski said in many parts of the metro area that “it really is less expensive to own than to rent, at least when looking at monthly payments.”

Owners incur maintenance costs that renters don’t but also benefit from mortgage interest tax deductions and any gains in the value of their homes, she added.