Home Values Rising Amid Hot Market
Values have risen for 41 months, but have yet to match the 2008 peak.
The Wisconsin Realtors Association (WRA) had this good news for home sellers this month:
”The hot Wisconsin housing market showed continued strength in July with both existing home sales and median prices higher than the levels in July last year, according to the most recent analysis of residential housing conducted by WRA. Existing home sales increased 16.9% in July 2015 relative to July 2014, and median prices rose 3.8% to $163,999…”
There was a similar trend for January-through-July home sales this year, compared to the same months last year, the WRA added.
It was welcome news because a home is the biggest financial asset of most families, so homeowners like to hear that they made a wise investment. But WRA’s statements prompted this nagging question: Are Wisconsin property values statewide – and especially residential property values – back to where they were before 2008, the start of the Great Recession?
The answers are no and no.
A review of annual state Department of Revenue reports on assessed property values paints this since-the-Recession picture:
*All property in Wisconsin was assessed at $479 billion in 2014, which was $35.3 billion – or 6.8 percent – less than in 2008.
*All residential property in Wisconsin was assessed at $336.8 billion in 2014, which was $34.1 billion – or 9.1 percent – less than its estimated value in 2008.
So, for the owner of the average Wisconsin home, its value still hasn’t clawed its way back to where it was in 2008. Sorry.
But that’s just the average. The exact change in each home’s value can vary greatly, since each neighborhood, and the economies of Wisconsin’s 1,852 local governments, are different. Property values in some areas of Wisconsin recovered only slightly from recession-era lows, while homes in other regions are worth more than they were in 2008.
One estimate of the drop in the value of the average home in Wisconsin is this: When the non-partisan Legislative Fiscal Bureau advises legislators on property tax issues, it estimates that the median-valued Wisconsin home was assessed at $150,505 in 2014 – a 12.4 percent drop from its 2008 value of $171,840.
And home values in only 12 of Wisconsin’s 72 counties were higher in 2014 in 2008, according to DOR reports. Those 12 counties were: Buffalo, Calumet, Chippewa, Eau Claire, Florence, Grant, Jackson, La Crosse, Monroe, Portage, Vernon and Wood. That leaves out the entire Milwaukee metro area.
Percentage decreases in residential property values in Wisconsin’s largest counties between 2008 and 2014 were: Kenosha, -22 percent; Milwaukee, -19 percent; Racine, -17 percent, Waukesha, -9 percent; Dane, -3.8 percent; and Brown, -2.4 percent.
In cities in Milwaukee County, the percentage decreases in home property values between 2008 and 2014 were: Milwaukee, -28.6 percent; Wauwatosa, -8.8 percent; West Allis, -17.8 percent; Cudahy, -6.2 percent; Franklin, -9.8 percent; Glendale, -17.6 percent; Greenfield, -17.8 percent, and Oak Creek, -10.2 percent.
WRA’s expert on home sales prices, Marquette University economist David Clark, explains its methodology: “We focus on existing home sales, since this is a snapshot of the health of the market at a given point in time. Our task is easier than that of the DOR or an assessor who has to determine assessed values. That is because they must determine what a home would sell for regardless of whether it sold in a given year.
“We simply evaluate the transactions that did take place. We don’t need to consider complicating factors such as whether the property might be valued higher because of improvements, or whether it might be lower due to a worsening neighborhood or school district. We simply let the market evaluate what a property is worth at the time of the sale.”
And the market evaluation has been very good. “Overall, we have been seeing increases in median-priced homes for all but two of the last 41 months,” says Clark. That’s more than three years.
David Stark, president of the Madison-based Stark Company Realtors, summarized the potential record pace of home sales this year in his August newsletter: “While it’s taken 10 years to get here, it looks like we’re about to return to real growth in housing sales.”
But, homeowners, the “here” that he speaks of is not the values of 2008.