J-S blows it again, this time on home sales figures

I noticed that the Milwaukee Journal-Sentinel was trumpeting the Wisconsin Relaltors' Association report of an increase in home sales for February on its front page in Madison today. Seems like a good sign that maybe Wisconsin is catching onto the Obama recovery despite the best efforts of the Walker Administration...well at least until you actually read the report.

The Realtors' Association report shows that while sales are up and inventories are starting to drop, it also shows that a lot of sales were the result of bottom-feeding, and not actually a growing economy. The prices of those sales continue to fall, down to a median price of $115,000 vs. $117,000 last year (1.7%), down $5,000 year-to-date. Worse, in lots of parts of the state with large amounts of sales, it was a bigger drop than that.

Median home sales prices, Feb. 2011 vs. Feb. 2012
Milwaukee Co. $92,500 2011, $74,500 2012 (-19.5%)
Racine County $122,500 2011, $89,500 2012 (-26.9%)
Waukesha Co. $228,000 2011, $219,250 2012(-3.8%)
Dane County $197,250 2011, $188,875 2012 (-4.2%)
Rock County $73,500 2011, $83,249 2012 (+13.3%)
Brown County $131,000 2011, $126,000 2012(-3.8%)
Outagamie Co. $121,500 2011, $137,000 2012 (+12.8%)
Western Wisc. $115,000 2011, $116,500 2012(+1.3%)
Marathon Co. $98,950 2011, $80,500 2012 (-18.6%)
North of Hwy 29 $89,512 2011, $85,000 2012 (-5.0%)

Well, no wonder these people might be seeing lower property taxes- their home values are in decline. I imagine the handful of dollars in taxes they might be saving is small solace in comparison to the thousands of dollars in lost home value they might be seeing in the age of Fitzwalkerstan. And scarier, these home prices and sales figures were probably helped by the country's economic recovery and the abnormally warm weather we've been having. From the same Journal-Sentinel article that tries to promote the big pick-up in home sales is this passage.

Realtor Tammy Maddente said there has been enough positive news about the economy, especially an improving unemployment rate, that more people are feeling confident enough to take a serious look at buying a house.

"No matter how good interest rates were in the last year or two years, no matter how good the pricing was, people just didn't have the confidence," said Maddente, executive vice president of First Weber Group. "I think people are sick of having their lives on hold."

According to the Realtors report, existing home sales increased in every region in the state in February, with most increasing more than 10% from a year ago.

The mild winter has helped, Maddente said.

"You have good economic news coming out on the federal front and the state front and then you have 70-degree weather. What could be more perfect? It's really helped ignite the spring market," she said

And indeed, others are pointing out that our amazing run of weather (83 again today in the Mad City, which I spent on the deck on the Malt House enjoying fine beverages) is its own mini-stimulus for the 1st Quarter of 2012. This CNBC report mirrors a number of others that indicate that sales which usually would be happening around April and May are happening now because people want to buy and get homes built when the weather's good. And that certainly matches the Realtors' history of the last 3 years in Wisconsin, where April through October are the peak months of home buying, and then there is a drop off from October through January as the weather cools.

So while the good weather and low prices may be skewing home sales higher in Wisconsin, it also means that we could well be seeing a bigger cutback (or smaller-than-usual increase) once we get to the Spring, because the underlying lack of demand hasn't changed- it's just people taking advantage of the prices and record temperatures. We'll need to see what happens in April and May (assuming the record heat ends) for both in sales numbers and in sales prices to see if there is some kind of actual strength in the Wisconsin economy. It can't be taken as a sign of improvement to see dropping home values despite the tailwinds of low interest rates and 2nd Quarter sales getting pushed into the Q1, and it sets up the real possibility of that Journal-Sentinel touted "rebound" becoming another "drop" come Springtime.