Friday, January 14, 2011

Housing Outlook for the 2011

Wisconsin Real Estate Magazine has an in-depth report on the economic and housing outlook for Wisconsin in 2011.

We'll let you read the full details for yourself, but here are a few interesting quotes:

"But house prices are now roughly in line with fundamentals like incomes, interest rates, and rents. For example, for much of the 80s and early 90s national house prices were about 3 to 3½ times the median household income. During the boom the ratio peaked at about five, but now we are back in step with historic norms."

The bust has been very difficult for our nation, but the rate of increase in the early part of this century simply was not sustainable. Having prices back to historic norms is a very good thing for our nation as a whole.

"Wisconsin’s economy and housing markets are continuing the recovery we noted last year. Statewide, our unemployment rate is 7.8 percent, 2 points below the national average. Even our worst-hit metropolitan areas like Janesville and Racine are outperforming the really hard-hit labor markets..."

This statistic is not helpful if you are one of the 7.8 percent. However, as a whole, it speaks to the robust nature of our economy compared to the rest of the nation. Confidence will help growth, and growth is what we need to fully recover from the recession.

"Some of our smaller metropolitan areas like Eau Claire and Green Bay, though still affected, have seen less of a boom and bust cycle than the rest of the country, and nothing close to the highly volatile markets in states like California and Florida."

This echoes something we have been saying for years: real estate is nothing but local. Just because there are enormous declines in Las Vegas or entire subdivisions nearly vacant in California does not mean that buyers here can expect to get houses for half of their 2006 values. And no, cash offers don't mean sellers will accept 50 cents on the dollar either.

"Housing prices in Wisconsin, as elsewhere, have stopped their decline and appear to have stabilized. "

Again, this is something that we have been seeing locally. Prices do appear to have stabilized across the board. The challenge now is to help sellers accept the reality of today's fair market value instead of longing for the pricing of four years ago.

We do recommend reading the entire report. It is a very readable work and a very informative one.

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