The Bubble and the Local Market

Has the real estate "bubble" burst in South Central Wisconsin?

Is this a Buyer's market and are Sellers desperate to move property?

How are interest rates affecting the markets?

Is real estate still a good investment?

These seem to be the questions we are getting as we move into the fall of 2006 and adjust to the shifting real estate market in the greater Madison area.

Have sales declined? Yes.

Yes sales have declined from the pace set in 2005. Bear in mind, 2005 was an all time record setting year. Never in history of organized real estate had there been as many units sold or dollar volume in sales as there was in 2005. Prior to the 2004 had set the benchmark. Prior to that 2003 was the all time best. Do you see the pattern here?

Let's take a look. In every example I compare actual numbers for the first 3 quarters of each year (January-September). In 2004 there were 6631 residential properties listed in the South Central Wisconsin MLS within Dane County. 4614 of those sold in 2004 which equates to 69.58% sold with and average sale price of $239,529 and average days on market (list date to accepted offer) of 47 days.

In 2005 there were 7486 residential properties listed, 4768 of those sold for an average sale price of $256,529 with average days on market of 55. That's 63.69% of those listed sold. Through the end of September 2006 there have been 8111 properties listed, 4129 properties sold which equates to 50.91% of those listed sold. The average sale price of those sold is $266,676 with an average days on market of 66.

Is this a buyer's market? In Dane County statistics would indicate we've moved more to a "balanced" market where the supply of homes for sale almost equals the demand for homes sold. There has been only a 13% shift from the percent of those listed sold in the current period of 2006 vs. that same time in 2005.

Let's look a little further out. For the year end 2005 there were 9194 residential properties listed. 5811 of those sold giving us a list to sell ratio of 63.20%. The average sale price of those houses and condominiums that sold was $259,736 and an average days on market of 56.

Is a balanced market healthy? I believe it's essential the long term economic viability of Dane County.