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| 8/29/2008 6:52:00 PM | Email this article • Print this article | The real estate market: Many say now's the time to buy
Falling home sales, overall drop in median sale prices make for a buyer’s marke
A soft economy, combined with weak consumer confidence, kept second quarter Wisconsin home sales below the same quarter last year, according to data just released by the Madison-based Wisconsin Realtors Association (WRA). Sale prices of existing homes were down slightly.
Home sales in the state fell 20.7 percent in the second quarter of 2008 compared to the prior year quarter, a slightly steeper decline than both the nation, which fell 16.3 percent, and the Midwest, which dropped 17.9 percent.
But that doesn't mean it isn't a good time buy - in fact, many are saying just the opposite - now is the time to get into the market.
"It is clear that consumer concerns over the direction of the economy have kept a lot of buyers on the sidelines," WRA chairman Michael Spranger said. "Our hope is that buyers and sellers recognize that every market is unique and every market offers opportunities."
Spranger noted that mortgage rates have begun to creep upward recently, which may prompt potential buyers into the market.
"This is an opportune time for buyers to get off the fence," he said. "Conventional 30-year fixed-rate mortgages increased about a half percent in the last two months, but still remain below seven percent. That means there are excellent opportunities in this market, but buyers shouldn't wait too long or they risk higher interest rates."
Wisconsin's median prices fell three percent to $162,200 in the second quarter of 2008, as compared to the second quarter of 2007.
"In a soft market like the current one, we expect some moderation in prices," said WRA president William Malkasian. "Given the relatively large reduction in sales volume in the second quarter, it's encouraging that our prices here in Wisconsin have declined only modestly."
Malkasian noted that other parts of the country have seen substantially larger price reductions this year. He also said that the housing bill just passed by Congress should provide some additional help to this market.
"First time home buyers can now receive a tax credit of up to $7,500, which should help to get some of them off the bubble and into a home," Malkasian said.
A survey of Realtors brokers across Wisconsin this month showed a consistent belief - 78 percent of respondents - that sellers are more motivated in the third quarter of this year as compared to that same quarter last year, but only 26 percent believe buyer interest has increased. Thus, almost 83 percent of brokers surveyed think that inventories will stay the same or rise in the third quarter.
There is consensus among brokers that the remainder of 2008 will be weaker than the second half of 2007.
"Realtors are closely tied to both buyers and sellers on a daily basis, and as a result have a good sense of current and near future market conditions," Malkasian said. "At this halfway point in the year, our folks are realistic about this market and are neither overly optimistic nor pessimistic about the balance of the year."
WRA reports second quarter sales volume, median sale prices
Second quarter sales volume and median price data for existing homes, gathered by the WRA from the state's regional Multiple Listing Services, show it's largely a buyer's market in Wisconsin and across the Northwoods
Sales data includes single family, condo/co-op and duplex properties, but does not include privately-sold properties, which would not appear in MLS listings.
In the Lakeland area, both Oneida and Vilas County posted downturns in existing home sales between the second quarter of 2007 and this year's comparable period.
Existing home sales in Oneida County fell 24.8 percent, slipping from 250 homes in the second quarter of 2007 to 188 homes in the second quarter of 2008.
Sales of existing homes in Vilas County, meanwhile, dropped 44.7 percent, falling from 208 homes in the second quarter to 115 homes in the second quarter of 2008.
Median sale prices in the Lakeland area in the second quarter of 2008 offered mixed results, with Oneida County posting an 11.8 percent rise over prior year figures, while vacation home-heavy Vilas County posted a 25 percent drop.
Median sale prices for existing homes in Oneida County, rose from $115,000 in the second quarter of 2007 to $128,600 in the second quarter of 2008.
Sale prices for existing homes in Vilas County fell from a $140,000 median in the second quarter of 2007 to $105,000 in the second quarter of 2008.
In the WRA's 17-county North Region, regional sales of existing homes fell a state-leading 31.2 percent, falling from 1,436 homes in the second quarter of 2007 to 988 homes in the second quarter of 2008.
The WRA's North Region encompasses Ashland, Bayfield, Barron, Burnett, Douglas, Florence, Forest, Iron, Langlade, Lincoln, Oneida, Polk, Price, Rusk, Sawyer, Washburn and Vilas counties.
Median sale prices for existing homes in the North Region fell 6.9 percent, dropping from $128,900 in the second quarter of 2007 to $120,000 in the second quarter of 2008.
Median sale prices in surrounding counties during the second quarter of 2008 included:
• Forest County, $112,000, up 26.4 percent.
• Iron County, $55,000, down 34 percent.
• Langlade County, $75,000, up 2.3 percent.
• Lincoln County, $103,000, up 9.1 percent.
• Price County, $78,500, down 14.9 percent..
Existing home sales in surrounding counties during the second quarter of 2008 included:
• Forest County, 30 homes, down 14.3 percent.
• Iron County, 29 homes, down 14.7 percent.
• Langlade County, 51 homes, down 26.1 percent.
• Lincoln County, 61 homes, down 31.5 percent.
• Price County, 31 homes, down 48.3 percent.
Statewide, the North Region posted the biggest declines in both existing home sales volume and median sales prices.
Median prices for existing homes fell statewide: Northeast Region, - 0.7 percent; South Central Region, - 1.1 percent; Southeast Region, - 3.5 percent; West Region, -2.2 percent; - 3.5 percent; Central Region, - 4.6 percent; and North Region, - 6.9 percent.
Existing home sales volume also fell statewide: West Region, - 14.6 percent; Central Region, - 18.6 percent; Southeast Region and Northeast Region, -21.8 percent; South Central Region, -23.6 percent; and North Region, - 31.2 percent.
Now is a good time to be looking, buying
Fall has traditionally been the busiest season for the Lakeland area real estate market according to Cheryl Kelsey, president of the Woodruff-based Northwoods Association of Realtors, which numbers 640 members in Oneida, Vilas, Price, Forest, Lincoln, Iron and Langlade counties in Wisconsin, and Gogebic, Iron, Dickinson and Baraga counties in Michigan's Upper Peninsula.
"Fall is probably one of our busiest times of the year for homebuying and writing offers," she noted. "People come on vacation during the summer months to look around, feel the area out. In the autumn, they come back and start making offers."
The ebb and flow tide of the real estate market has been running in favor of buyers on several fronts.
Prospective buyers, Kelsey said, should be aware that the real estate market in Wisconsin and the Midwest have been much stronger than other states and regions around the nation, given the relative resiliency of the Wisconsin economy compared to many of its counterparts around the nation.
As such, the median sale price of existing homes - in Wisconsin and the Northwoods - have fallen only moderately and likely reached their low ebb.
"While prices have come down a little bit, they're not drastically dropping," said Kelsey, a Realtor associate with the Woodruff office of Coldwell Banker Mulleady, Inc.. "...We're thinking prices have bottomed out. They're leveling off."
And with home sales running lower-than-average and properties staying on the market for protracted periods, Kelsey said today's sellers are "more motivated" than usual to do whatever it takes to turn a sale with a prospective buyer.
Savvy buyers should seriously consider striking while the proverbial iron is hot.
"It's an absolutely fabulous time to buy," Kelsey noted. "Sellers are more motivated. Prices are not going to fall a lot further than they are at this point. And the [home] inventory is great right now - there are wonderful choices to choose from ... Don't be afraid to come up and buy."
Kelsey said the number of showings by NAR members in August has run "strong," a development she believes is a "hopeful sign" for Northwoods sellers that the local real estate market is starting to turn the corner.
Refundable federal tax credit loan may sweeten the pot for buyers
A "significant" development for first-time homebuyers, Kelsey said, is the passage of H.R. 3221 - The Federal Housing and Economic Recovery Act of 2008 - a refundable tax credit for first-time homebuyers signed into law by President George W. Bush on July 30.
The tax credit provides qualifying first-time homebuyers with up to a $7,500 tax credit loan for single-family homes, townhomes and condominiums purchased on or after April 9, 2008 and before July 1, 2009.
The tax credit is available for first-time buyers, defined as anyone who has not owned a principal residence during the three-year period prior to the purchase.
Be advised that the first-time homebuyer tax credit program has income limits.
Single or head-of-household filers can claim the full $7,500 credit if their adjusted gross income (AGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000.
Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible for a partial first-time homebuyer tax credit, as are joint-filing married couples who earn between $150,000 and $170,000.
The credit is not available for single taxpayers with an AGI over $95,000 or married couples with an AGI exceeding $170,000.
In general, the tax credit is equal to 10 percent of the qualified home purchase price, but the credit amount is capped at $7,500. For most applicants, this means the credit will equal $7,500. For homebuyers purchasing a home priced at less than $75,000, the credit will equal 10 percent of the purchase price.
The tax credit program has payback provisions, essentially making it an interest-free loan to be repaid over 15 years. A homebuyer receiving a full $7,500 credit, for example, would repay the credit at the rate of $500 per year.
If the homebuyer sold the home prior to the completion of the repayment schedule, the remaining credit would be due from the profit of the home sale. If there is insufficient profit, then the remaining payback would be forgiven.
NAR's Kelsey said she and other Realtors are optimistic that the federal first-time homebuyers tax credit will propel the real estate market into 2009 with "stronger buying power," luring fence-sitting prospective first-time buyers into the real estate market, which is rich with opportunities.
Mulleady to be installed as new WRA chairman
In other Lakeland area real estate news, Realtor Mike Mulleady of Minocqua-based Coldwell Banker Mulleady, Inc. will be installed as chairman of the 19,000-member Wisconsin Realtors Association at the organization's Sept. 7-9 annual state convention at the Kalahari Resort in Wisconsin Dells.
Next year, 2009, marks the centennial anniversary founding of the WRA and the National Association of Realtors.
Eric Johnson can be reached at ejohnson@lakelandtimes.com.
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