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February 2012
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For purposes of this discussion we are concerned about the real estate market in Wisconsin's Great Northwoods, specifically the Counties of Vilas, Oneida, and Iron, and the counties contiguous to them. Our market is subject to the same influences of interest rates and the strength of the over-all economy as any real estate market. However, locally, additional factors come into play -- such as the fact that we are very much a second home (vacation home and investment property) market, the fact that we experienced a decade long period of phenomenal price appreciation, and the influence of supply in the equation -- developers nor anyone else has the ability to create new northwoods lakes in the same manner that new housing subdivisions may be created elsewhere. These simple facts work for us and against us.
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Here is my “take” on the local market:
• We are entering the 7th year of a market “correction” that has created a strong buyer’s market.
• Our market peaked in 2005, but it was 2008 before sellers finally begain to "get it", with slow but steady improvement in that regard since. In 2011 sellers were more flexible during negotiations than in any other time in the last 10 years, a trend expected to continue into 2012.
• However, there remains (and always will be) a large group of (unmotivated) sellers that are willing to wait for the market to turn in their favor. Their properties have been on the market for several years with no significant reductions in list price. They have waited as much as 7 years now and are willing to wait longer if need be.
• Market inventory is high and it is difficult for a seller to get his or her property to stand out except via asking price.
• Perhaps because of the high inventory, many potential buyers are not very motivated, either. They feel that they have plenty of time to make a decision. The stability of interest rates may play into this, also. Potential buyers may also lack the "confidence" to act on their desire to purchase due to their concerns about our economy's health and how it may impact on their own personal situation.
• Mortgage underwriting standards were tightened in the wake of the sub-prime fiasco but credit remains available at near historically low rates.
• Vacant residential lake lots have been a hard sell in recent years. Buyers seem more interested in improved properties. Several possibilities for this -- 1. Most of the good lots have already been taken, and the remaining prime ones are very expensive -- 2. Not so much speculation in the market; buyers are buying to hold and use for themselves -- 3. Improved properties many times offered more "bang for the buck." However, this segment of the market may be rejuvenating -- beginning in spring 2010 I started seeing more interest in vacant (lake) lots again, and asking prices for vacant lots started to become more reasonable.
• 2010 proved to be a welcome improvement over the last several years in terms of customer inquires, showings, offers presented, and sales, and 2011 built upon our 2010 gains. One truly encouraging aspect is that a large proportion of our new buyer contacts are just starting to look for property of their own in the Northwoods -- not potential buyers that have looked off and on for years. To me this indicates that our market is continuing to attract new customers. Concerning sales activity, for some time now it has been in the $250,000 and down range, with the occasional sale over $400K. Sales of high-end properties have become almost non-existant, but many of these properties started getting more looks in 2010, with a few sales occuring and more likely to occur in the near future among the properties that have had their prices reduced to more realistic levels.
• Even with all this change, some things haven't changed -- credit remains available for mortgages, and it still remains a great time to buy.
This is the state of our market boiled down into one four points: Large inventory, seller flexibility, low interest rates, buyer opportunities.
To summarize: For buyers, the time to buy is now. The smart buyer is on the leading edge of the trend, not the one running with the masses who missed the prime buying opportunity. For sellers, yes, you can sell your home or other property.
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Vilas County, WI| Number of Home Sales | | | Q1 | Q2 | Q3 | Q4 | Year End | | 1997 | 43 | 125 | 194 | 129 | 491 | | 1999 | 65 | 122 | 165 | 140 | 492 | | 2000 | 66 | 0 | 145 | | | | 2001 | 24 | 111 | 161 | 96 | 392 | | 2002 | 42 | 142 | 194 | 128 | | | 2003 | 71 | 140 | 203 | 138 | 528 | | 2004 | 71 | 147 | 199 | 142 | 559 | | 2005 | 143 | 255 | 345 | 244 | 987 | | 2006 | 131 | 233 | 269 | 209 | 842 | | 2007 | 123 | 208 | 253 | 152 | 736 | | 2008 | 72 | 115 | 134 | 109 | 430 | | 2009 | 37 | 90 | 138 | 91 | 356 |
| Median Price | | | Q1 | Q2 | Q3 | Q4 | Year End | | 1997 | $77,500 | $107,800 | $112,900 | $100,800 | $103,000 | | 1999 | $84,800 | $93,200 | $130,500 | $136,500 | $100,000 | | 2000 | $125,000 | $ | $153,100 | $ | $ | | 2001 | $180,000 | $142,200 | $145,000 | $175,600 | $151,100 | | 2002 | $174,700 | $150,000 | $166,700 | $170,000 | $ | | 2003 | $150,000 | $148,900 | $182,200 | $205,000 | $175,000 | | 2004 | $186,700 | $177,800 | $216,700 | $200,000 | $196,000 | | 2005 | $113,300 | $120,000 | $166,700 | $172,000 | $150,000 | | 2006 | $112,000 | $137,500 | $153,300 | $162,900 | $145,000 | | 2007 | $153,300 | $140,000 | $175,000 | $137,100 | $150,000 | | 2008 | $100,000 | $105,000 | $113,300 | $140,000 | $120,000 | | 2009 | $252,100 | $124,300 | $133,300 | $179,900 | $175,000 |
Iron County, WI| Number of Home Sales | | | Q1 | Q2 | Q3 | Q4 | Year End | | 2001 | 6 | 10 | 17 | 6 | 39 | | 2002 | 13 | 22 | 15 | 21 | | | 2003 | 9 | 22 | 23 | 23 | 73 | | 2004 | 13 | 15 | 20 | 19 | 67 | | 2005 | | | 55 | 53 | 108 | | 2006 | 32 | 43 | 47 | 41 | 163 | | 2007 | 24 | 34 | 31 | 33 | 122 | | 2008 | 11 | 29 | 39 | 22 | 101 | | 2009 | 7 | 15 | 27 | 16 | 65 |
| Median Price | | | Q1 | Q2 | Q3 | Q4 | Year End | | 2001 | $310,000 | $390,000 | $135,000 | $180,000 | $130,000 | | 2002 | $150,000 | $110,000 | $104,600 | $107,400 | $ | | 2003 | $ | $110,000 | $150,000 | $190,000 | $148,000 | | 2004 | $85,000 | $173,900 | $180,000 | $170,000 | $168,300 | | 2005 | $ | $ | $68,600 | $61,200 | $65,000 | | 2006 | $270,000 | $67,500 | $110,000 | $98,000 | $90,000 | | 2007 | $80,000 | $83,300 | $124,000 | $77,100 | $86,700 | | 2008 | $75,000 | $55,000 | $65,000 | $60,000 | $60,000 | | 2009 | $ | $184,600 | $55,000 | $156,000 | $140,450 |
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