Sunday, January 27, 2013

Housing prices picking up in U.S...but not so much here

      I noticed the Wisconsin Association of Realtors did some  crowing about the rebound in Wisconsin home sale prices, given that they were up 10% in December 2012 vs. 12 months ago, and that there were more than 20% more homes sold than in 2011.

  Good on the surface, but as you'll see, Wisconsin's housing market had been in a slump until the last couple of months, and the end of 2012 isn't necessarily an indication of future growth. A chart of the last 6 years bears this out. The numbers are understandably bumpy, with higher prices of the median home sale in June vs. December (a typical pattern because bigger, higher-priced homes are more likely to sell in the Summer months, as children are out of school and families find it easier to move).
However, the general trend has certainly been downward.

    Wisconsin median home sales price, 2007-2012


Narrowing it down to the age of Obama, let's now see how this trend compares to the rest of the U.S., and our Midwestern neighbors. Yes, there were large decreases in home prices much of the country from 2006-2008, and Wisconsin's drop wasn't as far as in other parts of the country like California, Nevada and Florida. But you'll see that much of the rest of the country has started to see home values go up, Wisconsin took quite a while to catch up. Throwing a 4-quarter moving average will help show the overall trend, and smooth out the seasonal ups and downs for prices. The U.S. is in red, Midwest in green, and Wisconsin in blue. Notice that Wisconsin largely tracked the drop in home values for the U.S. and the Midwest from 2009-2011. But look at how the gap starts to open up between the U.S. and (especially) the Midwest in early 2011, and the prices in the rest of the country were turning up ahead of Wisconsin.

   Median sales prices 2008-2012

 So Wisconsin's recent increase in home prices has little to do conditions unique to us, but instead it's the improving economy in the rest of the country that's dragging us off of the bottom. It is no coincidence that Wisconsin took several months to be part of the current housing price recovery that started in late 2011, because Act 10 and the school-cutting Walker/WisGOP budget was introduced in 2011, and the effects of these acts were still kicking in. Gee, you cut family's salaries and screw up a community's public schools, and property values start to lag. Amazing how that works, doesn't it?

And this is where the last chart comes in. Much like the other one, Wisconsin's drop in prices largely matched the one in the Midwest from September 2008 through the end of 2010, and neither part of the country had price drops as bad as we were seeing in the rest of the country. But starting with the passage of Act 10 in March 2011, you see how Wisconsin's home values went down, and the median home value drop in the last 4+ years is now more than the drop that's happened in the U.S. as a whole.

   The chart shows that the median home sales price in Wisconsin is still more than 10% below the levels it was at in September 2008, and it's just influenced by the typically lower prices of the winter season. The $132,000 median price the Wisconsin Realtors reported in December 2012 is still lower than the $134,900 we had in December 2010- the month before Scott Walker took office. And that's in clear contrast to the other parts in the country have seen their home sales prices go up over the same time period.

   Change in median home sales price, Dec 2010 vs. Dec 2012 
   U.S. +6.88%
   Midwest +4.44%
   Wisconsin -2.15%

    And it also explains why even if you've had a limited increase in property taxes over the last 2 years, it still isn't that helpful to you, because your TAX RATES have gone up due to the drop in home values. Even the president of the Realtors admits, “The slight upward movement in median home prices in 2012 will likely get some potential buyers off the fence in 2013, but the key to ongoing growth in housing is sustained employment growth in the state, which has been anemic at best this past year." Ruh roh.

  So despite the big talk from the pro-Walker Wisconsin Realtors, it still ain't working when it comes to the Wisconsin housing market, and don't let the spinsters from the Right-Wing Wisconsin tell you otherwise.

  P.S. My significant other reminds me that the taxes on her home sure as hell didn't go down- they went up by more than 10% this past year. That's the double-whammy of living in one of the few areas of the state that is seeing home prices going up- you get the higher tax rates AND the higher assessment.

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