Wisconsin the center of another housing bubble?

Here's an economic indicator in Wisconsin that is in stark contrast to the state’s awful jobs numbers and fiscal issues. It’s the state’s home sales stats, as the Wisconsin Realtors Association is unofficially reporting a jump in June home sales of 17.6% compared to June 2014. Nearly 9,300 homes were sold in Wisconsin last month, the most in the state's busiest home-sale month since the Bush-era housing boom.

“This is the best June sales volume we’ve seen in 11 years, well before the recession began,” said Dan Kruse, WRA board chairman. “Moreover, June has historically been a very busy month for housing sales,” Kruse added. “In a typical year, June accounts for about 11.5 percent of annual sales, which is the highest share of any month during the year,” said Kruse.

Compared to the first six months of 2014, sales were up by solid margins in all regions. The strongest sales were in the North and West regions, where existing home sales grew between 17.1 percent and 18.5 percent for the first half of the year. The growth from January through June in the remaining four regions was tightly clustered in the range of 9.9 percent to 12.2 percent, again relative to the first six months of 2014.

The statewide median price continued its strong growth trend as prices rose 6.3 percent to $169,000 in June compared to June 2014. “Prices are up $10,000 over the last 12 months, and they have been generally rising on an annual basis for more than three years,” said WRA President and CEO Michael Theo. After the recession began at the end of 2007, state housing prices didn’t bottom out until 2012; since March 2012, they have been generally rising when compared to the same month in the previous year. “It took several years to deal with the excess inventory created by foreclosures, but we are now at pre-recession levels on foreclosures in the state, and inventory levels are at healthy levels statewide,” said Theo. Foreclosures for the first half of the year are down 11.3 percent from the first half of last year, and they are nearly 61 percent lower than the peak foreclosure year of 2010. “We had just under nine months of inventory in June, but these markets are tightening,” Theo said. New listings were down 8.2 percent in June 2015 compared to June 2014, and the metropolitan counties had 6.7 months of available supply last month.

The rest of the country is also seeing growth in the housing sector, although sales haven't jumped double-digits like here in Wisconsin.

U.S. home resales rose in June to their highest level in nearly 8-1/2 years, a sign of pent-up demand that should buoy the housing market recovery and likely keep the Federal Reserve on track to raise interest rates later this year.

The National Association of Realtors said on Wednesday existing home sales increased 3.2 percent to an annual rate of 5.49 million units, the highest level since February 2007....

Economists had forecast sales rising to an annual rate of 5.40 million units last month. Sales were up 9.6 percent from a year ago.

Some of this is certainly due to the low interest rates that have persisted as the country has dragged itself out of the Great Recession, an economic event spurred on by the popping of the last housing bubble between 2006 and 2008. And Wisconsinites are hardly alone when it comes to people wanting to buy a home, as a gauge of homebuilder sentiment is at its highest level in 10 years. Those record-low interest rates may finally be coming to an end, and it’s being reflected in rising mortgage rates, which could slow down an overheating home market by increasing the total amount paid on a mortgage.

The 30-year fixed-rate mortgage averaged 4.09% for the week ending July 16, 2015, up from last week when it averaged 4.04%. A year ago at this time, the 30-year FRM averaged 4.13%.

The 15-year FRM also increased and grew to 3.25%, up from last week when it averaged 3.20%. In 2014, the 15-year FRM averaged 3.23%.

The chart on the 10-year U.S. Treasury note reflects this as well, with the yields going from 1.67% on February 2 to more than 2.40% by the end of June, and the current rate currently sitting at 2.32% That’s before any raises of interest rates by the Federal Reserve, which many analysts predict will start to occur in the next few months. If that’s the case, when do these rising sentiments and home sales and prices start to level off?

We’ve seen this routine before. Maybe the lending practices aren’t as sketchy or risk-laden as before, but these stats on rising home sales and prices seem to be out of whack with an economy that still has stagnant wage growth for far too many, reflected in retail sales growth that is still somewhat mediocre. Consistent U.S. job growth above 200,000 a month is helping, but wages continue to lag, with real hourly wages down 0.4% last month, and only up 2.0% before inflation over the last year.

Unless some other economic development comes along to continue to carry this upswing in housing, doesn’t it seem that things are getting ahead of where they should be, and this new housing bubble is going to deflate if not outright pop in the near future? And doesn't that seem especially true in Wisconsin, where the sales are up by more than we're seeing nationwide at the same time that we've had the worst job growth in the Midwest, and put into law wage-suppressing measures like (right-to) work-for-less and the removal of prevailing wage for many types of projects?

My 20 years of adulthood have earned me the right to be skeptical of the staying power of these housing numbers, and to be very worried about the fallout when the bubble does burst.