2018 Housing Market Remains Strong Despite Limited Inventories

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1 Date: 1/21/19 For Release: Immediately For More Information Contact: Michael Theo, WRA President & CEO, , or David Clark, Economist, C3 Statistical Solutions and Professor of Economics, Marquette University, , 2018 Housing Market Remains Strong Despite Limited Inventories MADISON, Wis. Despite low inventories, Wisconsin home sales in 2018 were only slightly off the record sales pace in 2017 as median prices continued to outpace inflation, according to the most recent analysis of the state housing market conducted by the Wisconsin REALTORS Association (WRA). Statewide home sales fell 2.2 percent below the record sales seen in 2017, making 2018 the third strongest year for home sales since the WRA re-benchmarked its data collection methods beginning in Strong demand but low supply of homes for sale pushed the 2018 median price up to $184,000, which is 7.0 percent above prices for The month of December closed the year on relatively weak sales volume, with home sales down 13.1 percent compared to December The imbalance of supply and demand pushed the median price for December up 5.3 percent to $179,000 over the past 12 months. We had a very solid year for sales, even though we had weak inventories again in 2018, said WRA Chairman Jean Stefaniak. Statewide, inventory levels in December were unchanged from 12 months earlier, with just 3.9 months of supply. This is well below the six-month benchmark that characterizes a balanced housing market. With the exception of higher-priced homes, supply has been very low, giving sellers the clear advantage in most of the markets across Wisconsin, said Stefaniak. A review of sales over the last year shows inventory levels between 2.9 and 4.0 months for homes selling below $350,000. Homes priced between $350,000 and just under $500,000 had 5.1 months of supply. In contrast, there were 9.7 months of supply for homes priced at or above $500,000. There are some great opportunities in our high-end homes, but it s important to remember that we don t sell a lot of properties in that range, so most buyers are still facing a strong seller s market, Stefaniak said. Only about 4.4 percent of all homes sold in Wisconsin are in that top price bracket. Strong demand and relatively weak supply in 2018 created significant price pressure, said WRA President & CEO Michael Theo. Median prices rose 7 percent in 2018 compared to Fortunately, this hasn t been inflationary. Declining energy prices helped to keep inflation in check, especially late in the year. The U.S. Bureau of Labor Statistics estimates December inflation rates fell below 2 percent, which brought inflation for all of 2018 in at just 2.4 percent. High inflation leads to high mortgage rates, so it s good the Fed has kept inflation in check, said Theo. Housing affordability has definitely slipped this year, said Theo. The Wisconsin Housing Affordability Index shows the fraction of the median-priced home that a buyer with median family income qualifies to buy, assuming 20 percent down and the loan balance financed using a 30-year fixed-rate mortgage. We ve got opposing forces when you look at changes in income, home prices and mortgage rates, said Theo. On the one hand, the strong economy has increased family income levels, which tend to improve affordability, but that s countered by strong price appreciation and the upward drift in mortgage rates, he said. The affordability index fell from 227 in December 2017 to 203 this past December. So what s in store for the Wisconsin housing market in 2019? We are closing in on the longest economic expansion in post-war history, but the economy remains strong nationally and statewide, said Theo. The national economy grew at a strong pace in 2018, with real GDP growing at 4.2 percent in the second quarter and 3.4 percent in the third quarter. The Wisconsin unemployment rate has remained at or below 3 percent since February, which are all good signs. However, there are economic headwinds in 2019, including slowing growth in Europe, China and India, as well as ongoing trade disputes with some of our largest trading partners. While the WRA continues to believe a U.S. recession is unlikely in 2019, the recent decline in affordability combined with slowing 1

2 economic growth will likely moderate housing demand. On the supply side, the WRA expects some small improvements in Total listings of existing homes for sale in December were similar to the levels of December 2017, falling just 1.9 percent over the last 12 months. This is a departure from previous months where double-digit declines in listings occurred. Builders are reporting some moderate improvement in new construction, with new single-family building permits increasing 2 percent in January through October 2018 over the same period in Finally, foreclosures have remained stable at the lowest levels since the early part of the 2000 decade. While there s a lot of uncertainty about the future direction of the economy, especially given the volatility in the stock market, we re cautiously optimistic about Wisconsin s housing market in 2019, said Theo. Assuming no recession, the WRA predicts the combination of solid but moderating demand and flat or slightly improving supply should keep housing sales in the vicinity of the last three years. This should also keep prices from going up as quickly as they did in A slight cooling of demand pressure may be just the break that some families need to finally buy a home, Theo said, adding, Using a REALTOR who is experienced is still the best approach to finding real opportunities in this housing market. The Wisconsin REALTORS Association is one of the largest trade associations in the state, representing over 16,400 real estate brokers, sales people and affiliates statewide. All county figures on sales volume and median prices are compiled by the Wisconsin REALTORS Association and are not seasonally adjusted. Median prices are only computed if the county recorded at least 10 home sales in the quarter. All data collected by the Wisconsin REALTORS Association are subject to revision if more complete data become available. Beginning in June 2018, all historical sales volume and median price data from 2015 forward at the county level have been re-benchmarked using the Relitix system, which accesses MLS data directly and in real-time. Data prior to January 2015 are derived from the Techmark system, which also accessed MLS data directly. The Wisconsin Housing Affordability Index is updated monthly with the most recent data on median housing prices, mortgage rates and estimated median family income data for Wisconsin. Data on state foreclosure activity are compiled by Dr. Russ Kashian at the University of Wisconsin Whitewater. 2

3 Wisconsin Housing Statistics Monthly Year-to-Date Dec 2018 Dec 2017 % Change Jan-Dec 2018 Jan-Dec 2017 % Change Unit Sales 4,980 5, % 82,760 84, % Median Price $179,000 $170, % $184,000 $172, % New Listings 3,506 3, % x x x Total Listings 26,729 27, % x x x Months of Inventory % x x x Average Days on Market % x x x WI Housing Affordability Index % x x x Price Range Total Dec 2018 Listings Housing Price Range Statistics Average Total Sold Days on (Jan Market Dec 2018) (Jan Dec 2018) Total Volume Sold (Jan Dec 2018) Months of Inventory (Jan Dec 2018) $0-$124,999 6, ,226 $1,670,798, $125,000 - $199,999 6, ,747 $4,102,709, $200,000 $349,999 7, ,723 $6,739,268, $350,000 - $499,999 3, ,428 $3,000,577, $500,000 and higher 2, ,636 $2,655,275,

4 Report Criteria: Reflecting data for: December 2018 State: WI Type: Residential Median Price Sales Months Inventory Avg Days On Market Region Central Adams 100, , % % % % Clark 98, , % % % % Juneau 104,000 94, % % % % Marathon 124, , % % % % Marquette 129, , % % % % Portage 161, , % % % % Waushara 222, , % % % % Wood 128, , % % % % Central Regional Total 125, , % % % % Median Price Sales Months Inventory Avg Days On Market Region North Ashland 71,500 95, % % % % Barron 147, , % % % % Bayfield 236, , % % % % Burnett 155, , % % % % Douglas 157, , % % % % Florence NA NA NA % % % Forest NA NA NA % % % Iron NA NA NA % % % Langlade 79, , % % % % Lincoln 120,000 91, % % % % Oneida 163, , % % % % Polk 173, , % % % % Price 92, , % % % % Rusk 128,750 84, % % % % Sawyer 210, , % % % % Taylor 113,000 84, % % % % Vilas 205, , % % % % Washburn 251, , % % % % North Regional Total 150, , % % % %

5 Median Price Sales Months Inventory Avg Days On Market Region Northeast Brown 174, , % % % % Calumet 180, , % % % % Door 230, , % % % % Fond du Lac 141, , % % % % Green Lake 164, , % % % % Kewaunee 170, , % % % % Manitowoc 108, , % % % % Marinette 97,000 87, % % % % Menominee NA NA NA 3 0 NA % NA Oconto 144, , % % % % Outagamie 166, , % % % % Shawano 78, , % % % % Waupaca 113, , % % % % Winnebago 162, , % % % % Northeast Regional Total 149, , % 1,002 1, % % % Median Price Sales Months Inventory Avg Days On Market Region South Central Columbia 179, , % % % % Crawford NA 133,000 NA % % % Dane 270, , % % % % Dodge 150, , % % % % Grant 124, , % % % % Green 160, , % % % % Iowa 247, , % % % % Jefferson 202, , % % % % Lafayette NA 93,500 NA % % % Richland 95,000 82, % % % % Rock 140, , % % % % Sauk 180, , % % % % South Central Regional Total 219, , % 981 1, % % %

6 Median Price Sales Months Inventory Avg Days On Market Region Southeast Kenosha 182, , % % % % Milwaukee 153, , % % % % Ozaukee 275, , % % % % Racine 176, , % % % % Sheboygan 169, , % % % % Walworth 202, , % % % % Washington 225, , % % % % Waukesha 289, , % % % % Southeast Regional Total 190, , % 1,800 2, % % % Median Price Sales Months Inventory Avg Days On Market Region West Buffalo NA NA NA % % % Chippewa 150, , % % % % Dunn 155, , % % % % Eau Claire 182, , % % % % Jackson 119, , % % % % La Crosse 198, , % % % % Monroe 170, , % % % % Pepin NA 104,500 NA % % % Pierce 178, , % % % % St. Croix 218, , % % % % Trempealeau 132, , % % % % Vernon 146, , % % % % West Regional Total 182, , % % % %

7 Statewide Median Price Statewide Sales Statewide Avg Days On Market 179, , % 4,980 5, % % Statewide Months Inventory Statewide New Listings Statewide Total Listings % 3,506 3, % 26,729 27, % Listing Price Range Current Properties For Sale Price Range Stats Avg Days On Market (sold listings) Number of Sales in Prev 12 months Total Sales in Prev 12 Months Months Inventory $0 - $124,999 6, ,226 1,670,798, $125,000 - $199,999 6, ,747 4,102,709, $200,000 - $349,999 7, ,723 6,739,268, $350,000 - $499,999 3, ,428 3,000,577, $500,000+ 2, ,636 2,655,275,

8 Report Criteria: Reflecting YTD data through: December 2018 State: WI Type: Residential Region Central Adams 127, , % % Clark 105, , % % Juneau 122, , % % Marathon 155, , % 1,860 1, % Marquette 138, , % % Portage 169, , % % Waushara 135, , % % Wood 122, , % 998 1, % Central Regional Total 140, , % 5,538 5, % Region North Ashland 90,000 98, % % Barron 157, , % % Bayfield 166, , % % Burnett 156, , % % Douglas 140, , % % Florence 172, , % % Forest 146, , % % Iron 159, , % % Langlade 86,500 93, % % Lincoln 129, , % % Oneida 168, , % % Polk 173, , % % Price 100, , % % Rusk 115, , % % Sawyer 199, , % % Taylor 115, , % % Vilas 225, , % % Washburn 171, , % % North Regional Total 155, , % 7,734 7, %

9 Region Northeast Brown 182, , % 3,437 3, % Calumet 185, , % % Door 215, , % % Fond du Lac 138, , % 1,543 1, % Green Lake 142, , % % Kewaunee 145, , % % Manitowoc 110, , % 1,108 1, % Marinette 105,000 93, % % Menominee 263, , % % Oconto 148, , % % Outagamie 174, , % 2,467 2, % Shawano 119, , % % Waupaca 136, , % % Winnebago 149, , % 2,392 2, % Northeast Regional Total 156, , % 15,705 16, % Region South Central Columbia 197, , % % Crawford 129, , % % Dane 279, , % 8,328 8, % Dodge 148, , % 1,084 1, % Grant 128, , % % Green 177, , % % Iowa 170, , % % Jefferson 210, , % 1,293 1, % Lafayette 117, , % % Richland 132, , % % Rock 155, , % 2,357 2, % Sauk 185, , % % South Central Regional Total 226, , % 16,559 17, %

10 Region Southeast Kenosha 174, , % 2,420 2, % Milwaukee 158, , % 11,718 11, % Ozaukee 297, , % 1,315 1, % Racine 169, , % 2,810 2, % Sheboygan 150, , % 1,459 1, % Walworth 210, , % 1,918 2, % Washington 237, , % 2,066 2, % Waukesha 289, , % 5,885 6, % Southeast Regional Total 196, , % 29,591 30, % Region West Buffalo 127, , % % Chippewa 170, , % % Dunn 166, , % % Eau Claire 179, , % 1,459 1, % Jackson 124, , % % La Crosse 188, , % 1,482 1, % Monroe 147, , % % Pepin 119, , % % Pierce 212, , % % St. Croix 242, , % 1,343 1, % Trempealeau 149, , % % Vernon 153, , % % West Regional Total 184, , % 7,633 7, % YTD Statewide Median Price YTD Statewide Sales 184, , % 82,760 84, %