Has Real Estate In Wisconsin Turned The Corner?By rampdog | April 28th, 2012 | Category: Real Estate Articles | No Comments »
The real estate market sputtered again in March; however some agencies are reporting that the pace of sales has increased for the 9th straight month. Is this a signal that the Wisconsin real estate market is about to turn? It’s possible, but then again maybe it’s not.
The real estate market is influenced by a ton of factors ranging from the affordability factor (interest rates, pricing…etc.) to supply and demand, and in some areas consumer confidence. Two things for sure have been pointing in the right direction for growth in real estate:
- Affordability of existing homes – While the market was crashing and sales were based on the amount of investors picking up foreclosures for pennies on the dollar, the value of homes has decreased to levels of about 2002-2003 which in many areas of the country were pre-boom levels. This trend is firmly in place, which means affordability in pricing is pointing in the right direction. Money is also very cheap, with rates much lower than when our friends and families purchased their first home back in the 80-90’s.
- Supply and demand – Supply has fallen in recent months with sellers of non-foreclosed properties pulling their homes off the market, this is due to two things, and first homeowners may not be able to sell their homes without bringing money to the closing table in terms of lost value. Appraisals, the value of homes has dropped to the point where many of the short sales and foreclosed sales have been substantially lower due to selling price. Many foreclosed homes need a lot of work, which also reduces the price in the market place because appraisals depend on sales and market price, along with replacement cost to set a value.
There are factors which will also serve to squelch the market in 2012-2013 which could be the economy, I have read that the true unemployment rate in some states is almost 20%, I can agree that in many construction trades it is more like 50-60% and until these folks start working and making a living again the pool of real estate buyers will remain limited, equating to a generalized reduction of the market as a whole.
In conclusion, the real estate market in Wisconsin will be hampered by the general economy and the overabundance of foreclosure properties and not much else. If the jobs market improves and builders get back to work, the real estate market could actually improve significantly in 2013 and beyond.