Home sales, prices increase
Monday, July 22, 2013
From April through June, the number of local homes sold was slightly more than those sold for the second quarter of 2012, according to The Gazette's most recent Economic Dashboard.
More important—at least to buyers and sellers—is the average price of those sales.
Rock County homes sold in the second quarter of 2013 averaged $121,517, a 5.5 percent increase over the average price paid during the second quarter of 2012.
In fact, the most recent quarterly average is the highest of any in the 13 quarters The Gazette has been producing its Dashboard.
“We're heading back in the right direction,” said Randy Borman, team leader for the Janesville, Milton and Evansville offices of Century 21 Affiliated. “We're seeing buyers come back to the market with some more confidence.
“The economy is still not great, but I think more people are getting used to it.”
The Wisconsin Realtors Association reported Monday that Wisconsin home sales rose 11.4 percent in the first six months of 2013. Median prices were nearly 8 percent ahead of those for the first six months of 2012.
Borman and others said the Rock County market is still a long way from the days of average prices of $135,000 to $150,000.
But, they said, a positive trend seems to be emerging after several quarters with average prices in the $95,000 to $105,000 range.
The reasons behind the increases in both sales and prices are many.
Borman said distressed properties—foreclosures and short sales—are far less prevalent than they were in recent years.
For the first six months of the year, Rock County foreclosure filings are down 55 percent, according to Rock County Clerk of Circuit Court Eldred Mielke.
Distressed properties dramatically impact sales prices because they're often completed at pennies on the dollar. Not only do they drag down average sales prices, they put off typical sellers who don't want to compete in that market.
Borman said distressed properties once accounted for 40 percent to 50 percent of local listings. Now, he said, about 20 percent of listings are likely to be distressed properties.
“The foreclosures seem to be becoming a thing of the past," said Colleen Nelson, president of the Rock-Green Realtors Association and a real estate agent with FirstWeber Realtors in Janesville.
“A couple of our agents recently handled a couple, but that has really slowed down,” Nelson said. “You talk to the banks, and they just don't seem to be holding the paper on these as they once did.”
Nelson said more higher-priced homes are now on the market, they're generating showings and they're starting to sell.
Coupled with fewer distressed properties on the market, pricier sales are bringing up the local average sales price, she said.
U.S. consumer confidence soared in June to a five-year high, and Nelson and Borman said they and their associates are seeing that in the local market.
“People are getting more comfortable,” Borman said. “Prices are starting to inch up, but there are still great values in the market.”
With recently depressed prices, many potential sellers have opted not to put their houses on the market. That's created an inventory issue, which Borman and Nelson said is slowly starting to improve.
“Sellers are realizing they might not get exactly what they want for their house, but what they are going to get is much closer to what they expect than it would have been a couple of years ago,” Borman said.
Many of those sellers also are going to be buyers in the local market, Nelson said.
“There's still some skittishness out there, but the sellers are realizing that … they're likely to encounter the same situation when they become buyers.”
THE COST OF MONEY
At historic lows for years, mortgage rates are ticking up, and some buyers and sellers are jumping into the market ahead of further increases.
According to Freddie Mac, the national average commitment rate for a 30-year, convention fixed-rate mortgage rose to 4.07 percent in June. That's the highest it's been in nearly two years.
While Borman and Nelson acknowledge the increase, they don't believe rates have reached the level where they are off-putting.
Both remember the days of interest rates that floated through the double digits.
“We were very excited when it got down to 9 percent,” Nelson said. “These increases might scare some first-time homebuyers, but I don't think they're at the point where they will have a huge effect on the market.”
Borman agreed, saying that his office has one couple that's waiting to close on a short sale.
“They are getting near the end of their rate lock, and the potential of an increase of $35 to $40 a month is something they have to consider in their budget,” he said.
Borman and Nelson said Rock County's real estate market is not subject to the wild swings of other markets around the country.
For that reason, its ups and downs are less severe than the spikes seen elsewhere.
“We like slow and steady,” Borman said. “We're heading back toward more reasonable levels, but I don't think Janesville and Rock County saw the wild swings that were around the nation.
“Of course, we had our set of unique circumstances.”