Dane County condo months of inventory by price range

On August 8th we took a snapshot of the Dane County condo market and measured the months of inventory by price range. The results show an especially competitive market for condos priced $600,000 and up. For example, take a look at the $800,000 and up price category. A total of 28 condos were on the market as of August 8th, but only 4 units in this price category had sold during the previous year. That's 84 months - or 7 years - of inventory.

It's no surprise we are seeing aggressive buyer incentives and new prices for some of Madison's luxury condo developments. Stay tuned as we take a look at the months of inventory by price range again later this year.

For additional information on Dane County condo months of inventory, check out these pages at DaneCountyMarket.com:

• Months of inventory monthly update
• Months of inventory by location

Dane County condo sales are decreasing across most price categories

And much of the decrease is occurring in the more affordable price ranges. Check out the chart below, which compares the number of Dane County condo sales from the first 6 months of 2007 to the number of sales from the first 6 months of 2008. Sales have declined by at least 30% in all of the price buckets ranging from $125,000 to $274,999.

We recently saw a similar trend emerge when we looked at the change in sales volume for single family homes. Sales continue at a sluggish pace in most price categories, with home and condo sales in many of the most affordable price buckets taking a big hit.

Dane County housing starts continue to trend lower

Thanks to MTD Marketing Services of Wisconsin, we'll be providing regular updates on Dane County housing starts from this point forward. Check out this graph:

The 50 housing starts in July represent a low point over the last three-and-a-half years. Here's how the number of housing starts stack up for each of the last 4 Julys, dating back to 2005:

• July 2005: 177
• July 2006: 111
• July 2007: 86
• July 2008: 50

On a year-to-date basis, housing starts are down 41% from last year.

Where will housing starts be heading in the near future? Expect housing starts to remain soft, as builders wait for evidence that more buyers are entering the market.

For more information on Dane County housing starts, including a historical view dating back to the year 2000, visit the real estate trends page at DaneCountyMarket.com.

Sequoya Commons condo project in the news

Judy Newman provides an overview of the Dane County construction market in today's Wisconsin State Journal. Sequoya Commons, a mixed-use development on Midvale and Tokay boulevards on Madison's west side, is one of several projects profiled in the article.

Some notes on the Sequoya Commons project

• Phase I, which will be completed soon at a cost of $15 million, will be home to the new Sequoya library, 5 retail spaces, and 45 condominiums.
• The Chocolate Shoppe ice cream store will occupy one of the retail spaces (no mention in the article about the other 4 retail spots).
• Eight of the 45 Phase I condo units have been sold (18%).
• Phase II, originally scheduled to start on October 1st, has been put on hold. Plans for this project included 100 residential units and 10,500 square feet of commercial space at a cost of $20 million.

We recently posted the percent sold statistics for a number of other Dane County condo developments. Sequoya Commons is one of several area developments that is less than 50% sold.

Mortgage rates edge higher but remain at historically low levels

Mortgage rates have edged higher in recent weeks, according to surveys administered by Freddie Mac.

As of August 14th, the average commitment rate for a 30 year fixed rate loan was 6.52%, up about six-tenths of a percent from rates in April. The average commitment rate for a 15 year fixed rate loan on August 14th was 6.07%, also up about six-tenths of a percent.

Rates still remain low by historical standards. Check out this graph which shows rates dating back to 1992.

Rates in the 1990s for 30 year fixed rate mortgages ranged between 6.5% and 8.5% before heading below 6% during the housing boom that ended in 2005. Since that time, rates have largely been below 6.5%. Not bad at all compared to where rates have been in the past.

Dane County prices were higher in Q2 2008, Wisconsin and National prices were lower

More evidence that the Dane County real estate market is faring well compared to most other markets around the country. Yesterday the National Association of Realtors and Wisconsin Realtors Association released their median price and sales volume statistics for the second quarter of 2008 (April through June).

Median Price

• The Q2 2008 median price for Dane County homes and condos increased by 1.1% from Q2 of 2007
• The Wisconsin median price decreased by 3%
• The National median price decreased by 7.6%

Sales Volume

• Dane County Q2 2008 home and condo sales decreased by 23% from Q2 2007
• Wisconsin home and condo sales decreased by 21%
• National home and condo sales decreased by 16%

Dane County sales continue at a sluggish pace, but prices are holding up very well compared to other markets around the state and country. Two big reasons for this are Dane County's stable economy and low unemployment rate.

For more information on the Dane County single family home and condo market segments, visit the real estate trends page at DaneCountyMarket.com.

Dane County foreclosures increase in July

Dane County foreclosures increased in July, although at a more moderate rate compared to earlier months this year. Foreclosures increased from 71 in July of 2007 to 91 in July of 2008, an increase of 28%.

The graph below shows the number of Dane County foreclosure filings dating back to January of 2005. Monthly filings have been above the 80 mark for 11 of the last 12 months, but are off their peak from earlier this year.

Year-to-date foreclosures through the month of July increased from 466 in 2007 to 723 this year, an increase of 55%.

How will rising foreclosures impact the Dane County real estate market? Expect inventory levels to remain high as more and more foreclosed homes work their way through the legal process and onto the open market.

For more information on the latest foreclosure trends, visit the economic trends page at DaneCountyMarket.com.

Required marketing time varies significantly by price range for Dane County homes

Our last post covered how the months of inventory for Dane County single family homes vary significantly by price range. The total required marketing time also varies significantly by price category. Check out the chart below, which shows the total required marketing time for Dane County homes through the first 6 months of the year.

Although homes at less than $275,000 are taking on the average under 8 months to sell, there is a clear jump up in the $400,000 and up price categories, where the months of inventory is 12 months and up.

Higher months of inventory create a more competitive market and drive marketing times higher - another reason why marketing, staging and pricing are so critical at the higher price points.

Dane County months of inventory vary significantly by price range

On Sunday we covered the change in sales volume for Dane County homes by price range. The results were a bit surprising, with homes in the $175,000 to to $274,999 price range showing the largest sales decrease (on a percentage basis) compared to last year. Although sales have decreased significantly within the $175,000 to $274,999 price range, the months of inventory remain much lower compared to homes in higher price categories.

In the table below you'll see the months of inventory for homes under $275,000 are at or below the Dane County average of 9 months. On the flip side, the months of inventory for homes $325,000 and up range from 10.1 months to 28.6 months.



It's interesting to note there are roughly the same number of homes on the market within the $200,000 to $224,999 price range (308 homes) as there are within the $400,000 to $499,999 price category (275 homes). However, more than twice as many homes sell each month in the lower price range - 50 homes per month versus 22 in the higher price category.

With fewer buyers out in the market for higher priced homes, sellers in the higher price ranges need to be especially competitive with their listings. Aggressive marketing plans, thoughtful staging, and sound pricing all play a very big role in getting homes sold at the higher price levels. For more information on marketing, staging and pricing, feel free to visit our Selling Real Estate page at DaneCountyMarket.com.

WSJ article about gas prices and Dane County real estate

This article comes from Marv Balousek of the Wisconsin State Journal and includes interviews of area homeowners and real estate agents.

Gas prices have certainly become an important factor for some, but the data for 28 area communities does not yet suggest a clear pattern where buyers are choosing Madison and other more central locations over Dane County ring communities. We'll revisit this topic later this year after we've accumulated additional sales data.

Dane County home sales are decreasing across most price ranges

But not all price ranges. The table below compares Dane County home sales (no condos) during the first 6 months of 2007 to the number of home sales during the first 6 months of 2008.

Sales for homes selling for less than $100,000 and for between $125,000 and $149,999 have increased during the first 6 months of the year.

Meanwhile homes selling for between $175,000 and $274,999 have experienced the largest sales decreases, ranging from 28% to 38.2%, depending on the price bucket. So far it's the homes in the bread and butter price categories that are experiencing the largest sales declines from the previous year.

We'll continue to look at the market by price range over the next two weeks. In our next post we'll look at the months of inventory by price range for Dane County single family homes.

How long does it take to sell the average Dane County Condo?

About 19.5 months (593 days), based on our year-to-date calculations using data that is available from the South Central Wisconsin MLS. Last year's average through the month of June was about 15.9 months (485 days).


For frame of reference, the average time required to sell a Dane County condo during the first 6 years of the decade was consistently in the range of 5 months (about 150 days).

Why are the Dane County condo numbers so high? Due to the large increase in condo supply and recent decrease in condo sales. Many new condos have entered the market in the last 2 to 3 years and have yet to sell.

Keep in mind that the numbers listed above are averages only. Plenty of condos end up selling more quickly than the average. And quite a few end up taking more time to sell.

For related articles you can visit these pages at DaneCountyMarket.com:

• Days on Market Trends, updated monthly with stats on the local condo market.
• Selling Real Estate, for articles and tips on selling real estate in Dane County.

Dane County housing starts at lowest levels in at least a decade

Dane County housing starts in the month of July remained low, according to a Wisconsin State Journal article (print only) from Friday's edition.

The Dane County numbers

• 50 permits for homes and duplexes were issued in July compared to 85 permits in July of 2007, down 41%.
• 430 permits were issued through the first 7 months of the year compared to 716 permits during the same time period last year, down 40%.

The Madison numbers

• 95 permits were issued year-to-date through the month of July compared to 213 permits during the same time last year, down 55%.

According to the data source, MTD Marketing Services, Dane County housing starts are at their lowest levels in over a decade. This is tough news for the building industry, but a baby step toward driving Dane County inventory lower.

Dane County condo mid-year review

Here's how the Dane County condo market fared during the first 6 months of 2008 versus the same time period last year. All data comes from the South Central Wisconsin MLS.

• Year-to-date median price: $165,150 in 2008 vs $168,500 in 2007, down 2%
• Sold listings: 656 in 2008 vs 956 in 2007, down 31.4%
• Listing success rate: 37.9% in 2008 vs 42.3% in 2007, down 4.4%
• Days on market (sold listings): 166 days in 2008 vs 147 days in 2007, up by 19 days
• Days on market (expired listings): 261 days in 2008 vs 248 days in 2007, up by 13 days

Here's a Dane County condo inventory comparison, July 31st of 2008 versus July 31st of 2007:

• Active listings: 2,242 listings on 7/31/2008 vs 2,473 listings on 7/31/2007, lower by 231
• Months of inventory: 18.3 months on 7/31/2008 vs 16 months on 7/31/2007, higher by 2.3 months
  

For our full set of year-to-date condo statistics, visit our Dane County Condo Snapshot at DaneCountyMarket.com. In our next post we'll cover how the total required marketing time for the average Dane County condo has changed since 2007.

Pending home sales are down, prime mortgage delinquencies are up

The June 2008 national pending home sales index released yesterday by the National Association of Realtors dropped by 12.3% from last year's value. The index is intended to be a leading indicator of future closings. According to the NAR:

"A sale is listed as pending when the contract has been signed but the transaction has not been closed."

Based on the latest pending home sales figure, expect Dane County sales volume to remain lower over the next several months.

The Wall Street Journal also published an article yesterday on the delinquency rate for mortgages originated in 2007. According to a study conducted by the FDIC, .91% of "prime" mortgages originated in 2007 were seriously delinquent after 12 months. The equivalent number for mortgages originated in 2006 was .33%.

Stay tuned as we continue to track foreclosures at DaneCountyMarket.com and in the foreclosure topic of our blog.