Housing market finishes 2014 strong
December home sales 2.1% higher; median prices up

By Dwayne Butler - Freeman Staff

Jan. 20, 2015

MILWAUKEE - Real estate data released by the Wisconsin Realtors Association shows the state housing market had a strong finish to 2014.

December home sales were 2.1 percent higher compared with December 2013, according to the WRA on Monday. Median home prices were 4.3 percent higher to $145,000 over the same time frame.

Overall, the WRA reported that 2014 home sales finished just 1.5 percent behind 2013. However, median prices were higher in 2014, up 3.1 percent to an annual statewide rate of $148,000.

“Despite a slow start due to harsh winter weather early in the year, 2014 rebounded nicely and ended with an excellent December and a very good final quarter of the year,” said Dan Kruse, WRA board chairman.

Michael Theo, president and CEO of the WRA, was encouraged by the strong fourth quarter, its best since 2005, he said, which was prior to the start of the Great Recession.

“A 3.1 percent price increase over the year is good news. For three years in a row, home prices have kept pace with inflation without seriously impacting housing affordability,” said Theo, noting the annual rate of inflation throughout 2014 ranged between 1 and 2 percent. “This is a sustainable growth pattern.”

Meanwhile, median home prices continue to rise. David Clark, a professor of economics at Marquette University, told an audience in Brookfield last week that prices are up nationally by 5 percent. In Wisconsin, home prices have not returned to pre-recession levels, but they have made up considerable ground since the first quarter of 2012; they are up in 33 of the last 34 months.

By contrast, the average median-priced home in 2007 stood at $162,400, according to the WRA. That figure fell by nearly 19 percent to $131,800 in 2011, it added.

“When you consider that prices in 2007 were likely inflated as a result of looser lending practices, we are probably much closer to a normal price today given current lending standards,” Theo said.

Overall, Theo said “the market is finally getting back to normal in a number of ways.” He said the first indicator was the drop in foreclosures, which were down 26.5 percent in 2014 when compared with 2013, and are essentially at pre-recession levels for the first time since the recession began, according to the WRA.

All told, the state had 11,439 foreclosures in 2014.

“While the availability of foreclosed homes presents buyers with opportunities, they (foreclosures) can be toxic for neighborhoods, so it’s good to see them back to normal levels,” Theo said.

Another reason for normalcy in the market is that statewide inventory levels are relatively stable and have been since 2012. In December, 7.5 months of supply was available, which is essentially a balanced statewide market, according to the WRA.

Finally, the WRA says the labor market continues to improve with the unemployment rate falling to 5.2 percent in November even as the labor force has been steadily growing.

The WRA is optimistic about the housing market in 2015. Working for the market are low interest rates, low expected inflation because of falling energy prices, high affordability in housing and a growing economy.

On the other hand, it’s likely mortgage rates will increase, weighing down the affordability slightly. 

“The feds have already signaled the possibility of raising short-term rates as the economy continues to grow, and this eventually will mean higher mortgage rates,” Theo said.

 

At a glance

- The number of state new listings in 2014 (115,242) was only slightly behind the number in 2013 (115,318).

- The number of closed sales dipped by 1.5 percent (68,661) in 2014.

- The median sales price of $148,000 in 2014 was 3.1 percent higher than $143,500 in 2013.

- The Northeast and North were the only state regions to post increases in home sales. The Milwaukee region, which includes Milwaukee, Ozaukee, Washington and Waukesha counties, was behind 2.8 percent in 2014 with 17,571 homes sold.

- The average Milwaukee region price in 2014 was $170,000, a 4.3 percent increase over 2013.

Source: The Wisconsin Realtors Association

www.wra.org

Email: dbutler@conleynet.com