2007 Local Market Update

This article was published on January 12, 2007 in the Milwaukee Journal Sentinel. It reports that though there were fewer home sales and increased time on market for homes to sell, values still slightly increased in 2006.

Housing sales lost pace but not value

Realty market sagged in '06; sellers optimistic about '07

By MICHELE DERRUS

Metro Milwaukee's existing-home market shrunk in 2006 but largely held its value, industry figures show.

Home Prices

2006 average resale prices in metro area, by county: Milwaukee: $183,907 Ozaukee: $311,149 Washington: $228,926 Waukesha: $304,541 Other area counties: Kenosha: $199,097 Sheboygan: $155,936 Racine: $183,171 Walworth: $292,814

The four-county region registered 20,071 Realtor-brokered sales in 2006 - the smallest volume in at least three years and 7.3% below 2005, Metro Multiple Listing Service reported Thursday. Sales pace was pokey - weeks and sometimes months longer than 2005 - but most communities eked out small price gains, MLS statistics show.

"So much for the housing bubble. We didn't have a free fall. We had a soft landing," said MLS President Tammy Maddente.

But some market players suffered turbulence as the nation's 2000-'05 housing boom abruptly ended, said Maddente, who is executive vice president of Wisconsin-based First Weber Group.

"We had this frozen market, as buyers sat on the sidelines," Maddente said. "You were showing more houses, working harder to get a deal. And the deals were hard to keep together."

Deals soured over what Dan Buttery, president of Argus Investments Inc. in Milwaukee, called "the logjam effect."

He explained: "You get a qualified buyer. They love the home. They make an offer - but it's contingent on the sale of their home. Six months go by and their home is still unsold. So the deal goes bad. This was something I saw a lot in '06."

Price drops were a way of life in 2006, Buttery said.

"Clearly, homes are sitting on the market much longer, with prices coming down after a quarter or six months. And still, they're only getting tepid responses," he said.

While Buttery sees no upturn in sight, realty agents are optimistic about 2007.

"The numbers we're tracking - showings, open house traffic, Internet traffic, offers written, accepted offers - are all ahead of last year," said Joseph A. Horning, president of Shorewest Realtors. "That points to a good year."

Heightened buyer activity is occurring across the country, said Pete Flint, chief executive officer of the San Francisco-based realty company Trulia.com.

"In the first 10 days of January, we've seen an unexpected increase in buyer traffic to our Web site - way beyond our expectations," Flint said. "I'd call that an early positive signal."

Another good sign, picked up this week by his company's new market-tracking service: 11 of 15 big U.S. cities, including Milwaukee, showed improved conditions at the close of 2006.

"Some markets, like parts of southern California and southern Florida, have had a hard landing," said Flint. "But broadly, yes, it was a soft landing. And I'd definitely say we're through the worst."

To make a sale in 2006, however, "a lot of sellers were participating in financing or doing improvements," said Bill Berland, president of Milwaukee-based Homestead Realty Inc.

Unofficial sales concessions, plus an influx into the resale market of pricey newly built homes that builders couldn't sell direct to consumers as usual, may mean that what appears modest price appreciation was really just a plateau.

MLS reported higher 2006 prices in most communities. Countywide, the change over 2005 was:

• Milwaukee, up about $7,000 to $183,907.
• Washington, up about $3,000 to $228,926.
• Waukesha, up about $5,000 to $304,541.
• Ozaukee, up about $18,000 to $311,149.

Prices went up, down and sideways, depending on community. For instance:

• The city of Milwaukee rose about $9,000 to $155,608, but northern neighbor Shorewood dropped $10,000 to $335,882. Glendale, also to the north, edged up about $1,900 to $213,099.
• In Waukesha County's Lake Country, Delafield soared $50,000 to $483,336, while Pewaukee plunged $13,000 to $278,135 and Oconomowoc sank about $16,000 to $308,429.

"Some markets might have been slightly overheated, and there were corrections," Horning said. "But across the board, prices went up." What appears local downturns, he said, was actually a reflection of the fact that many owners of high-priced homes stayed put last year, awaiting better times.

Judy Hearst, vice president and regional manager for Coldwell Banker Residential Brokerage's southeast Wisconsin region, agreed.

"Maybe prices didn't go up," she said, "but they didn't go down either."

The following chart represents numbers of home sales but not prices:

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