Real Estate Rebound in the Northwoods?

 

Don’t look now but some things are starting to show some pretty good signs of a bounce back in sales.  For those of you who did not see the news report by channel 12 the other night, it showed that home sales in Wisconsin were down 7.5%, yet the Northern Region was up 4.6%.  Specifically, Oneida County sales were up 14.7% and Vilas County sales were up 19% in 2010. 

One thing that was not distinguished in the story was the difference between sales and sale prices.  When we hear a story based on a set of numbers (like sales in this story) it is easy to draw conclusions that are incomplete.  Some might think this means the prices are well on their way back and many people will confuse sales with sale prices.  Sale is one piece of the picture we need to look at but not the entire picture.  When we only look at a piece of a picture and try to draw a conclusion, you might not know what you are looking at or worse, think you are looking at something you are not.  When we look at sales for single family homes and condominiums in the Northwoods we see that the average sales price for 2010 was roughly $172,000 vs. $165,000 in 2009.  This is a 4.2% increase.  As we look at the Median (taking the middle number of a series of numbers.), we see that in 2010 the Median number was roughly $132,000 vs. $125,000 in 2009.  A 5.6% increase.  These are very valuable pieces of information that show that sales prices are moving forward in the Northwoods, despite the fact that they are not moving as fast as sales.

You may have seen the last couple of interviews with Diana Olick (from Realty Check) on CNBC that I posted on the Eliason Realty blog recently.  She pointed out there were signs showing sales were starting to pick up nationally, despite the fact that prices don’t appear to be recovering.  She was not surprised by this at all.  In fact, she seemed to have expected it.  She reminded all of us that “sales and prices are directly related and . . . sales always lead prices”.  She states that during the boom, sales started going down and prices were still going up.  She reported then that this was unsustainable.  She also said that the sales will lead the prices when it comes to recovering.  Nationally, prices are still going down slightly, but sales have started to go up.  For three months straight there have been increases in both pending and existing sales.  With this in mind, Diana says “maybe it’s the beginning of the curb and maybe it is time to get back in.  You will never time the exact bottom of the market.”  Continued increases in sales numbers will make her believe in this position even more so. 

So here are some more pieces of the picture, but it is still not complete.  We need to see what is going to happen to foreclosures.  We also have to realize, as I have said many times before, that Real Estate is always a local market.  So how do Diana’s comments apply to real estate in the Northwoods? 

 All expectations are that foreclosures will be similar to slightly higher in 2011 nation wide than they were in 2010.  Yet, locally, in the Northwoods I don’t know that we are expecting foreclosures to go up in 2011.  I have spoken to a couple of bankers about this.  They are expecting foreclosures to go down on their books in 2011.  One of the bankers I spoke to also said they feel the Northwoods does not see the high highs or the low lows that other places get.  With this in mind, he said our unemployment and foreclosures have been better than the rest of Wisconsin and the nation.  So, we feel that the Northwoods foreclosures will be no worse than or similar to 2010, we have to take that as a positive sign with the rest of the data we are collecting.

In addition, there are some signs there is a lot of money on the sideline.  Nationally we heard that 58% of the people don’t feel real estate will rebound until 2012.  20% feel it will not be until 2015.  Only 10% feel there will be a rebound begun in 2011.  On www.EliasonRealty.com last week we asked what 2011 will bring to the Northwoods real estate market.  Over 55 people participated here were the results.

• 32% felt the prices were going to be flat
• 23% felt declines of 3% – 9% were likely
• 38% felt the declines would be 10% or greater
• Only 7% of the people felt there would be 3% gain or greater

 

So what does all of this negativity mean?  It certainly seems to indicate that the confidence is not there to get people “off the fence” to buy real estate just yet.  It may sound strange but this can be a huge positive.  When everyone is negative, that means few people are buying.  This means there are far less buyers than sellers and prices are going to have to go down to generate sales.  When this happens in the stock market, typically the bottom is often signaled by a time when there is significant negative confidence (tops are also found at times when there is significant positive confidence).

With all of this in mind, what do I think? This is what I said in my Market Report in early 2010. 

“I believe we will continue to see the volume and units of real estate sold continue to increase over that time.  So won’t that push prices higher as well?  Eventually it will.  Despite the positive moves so far in 2010 and the fact that I believe these trends will continue, I believe we will see this buyers market continue at least through the spring of 2011.  This is because I believe prices will have trouble getting good traction until we are able to reduce the inventory of properties.”

I predict 2011 will mark the bottom of the Northwoods Real Estate prices.  That is a big prediction.  I realize trying to call a bottom is very hard.  Yet, everything I am seeing says that 2011 will likely push out the majority of pressures that are pushing our market down.  The recovery will not be quick from here and won’t see 10% appreciation on prices year after year from this point on.  I suspect the Northwoods will show 2% – 5% price increases off of the Median and Mean averages and that sales have 10% – 15% increases in 2011.

Check out Housing Turnaround or Double-Dip? – CNBC.com

Housing Turnaround or Double-Dip? – CNBC.com

 

Upcoming Winter Activities in the Northwoods.

January 7-9, 2011 Classic Vintage Weekend in Eagle River at the Derby track. Join hundreds of vintage racers at the races voted most fun event by SnoGoer magazine! 

January 8, 2011 11th Annual Original Northwoods Polar Bear Plunge – At St. Germain Lodge & Resort. Plunge begins at noon. Call for pledge sheets and registration form. To benefit Angel on My Shoulder, a non-profit cancer support foundation. In 2009, an astonishing $29,000+ was raised by 144 jumpers and over 1,000 spectators to benefit Camp Angel/Camp Teen Angel and other programs of Angel On My Shoulder. For more information, visit http://www.angelonmyshoulder.org or email them at angel@nnex.net. (715) 542-3433 (800) 860-3431

January 15 & 16, 2011 World Championship Kitty Kat Races – Black Bear Lodge Held on Little St. Germain Lake. Wisconsin Kids Snowmobile Racing Association or WKSRA information from Black Bear Lodge

January 14-16, 2011 AMSOIL World Championship Snowmobile Derby, in Eagle River.

January 21& 22, 2011 Snowmobile Radar Run, in St. Germain on Lt. St. Germain Lake. Visit http://www.radarracers.com for more information.

February 2 & 3, 2011 Vogel Enterprises Groomer Show – Equipment displays and demonstrations from 9:00 AM to 4:00 PM. Food served by the Bo-Boen Snowmobile Club. (715) 479-4200

February 11- 13, 2011 National Adult Pond Hockey Championships on Dollar Lake in Eagle River; named the recipient of SportTravel Magazine’s 2009 SportsTravel Award for the nation’s best amateur single-sport event. Watch exciting hockey action as more than 200 teams compete on 24 lake rinks for the National Championship. Click here for complete tournament information

February 18-20, 2011 Save A Star 2nd Annual Winter Weekend Getaway at Black Bear Lodge. Everyone is welcome to attend this great event to help raise money to increase awareness of the dangers associated with improper prescription drug use.

February 19, 2011 27th Ride With The Champs – Join us in St. Germain for the nnual inductions into the Snowmobile Hall of Fame. Ride with past and present race champions and snowmobile VIP’s, and then attend the induction ceremony.For information, visit http://www.snowmobilehalloffame.com, email info@snowmobilehalloffame.com or call (715) 542-4488

February 19&20, 2011 Great Northern Sno-Cross Series, in Eagle River.

February 26, 2011 Bo-Boen Hosted Vintage Snowmobile Race Held at the St. Germain Community Park with registration at 7:00 AM and racing starting at 10:00 AM, this event is hosted by the Bo-Boen Snowmobile Club. There will be food and drinks available. Part of the Northern Vintage Snowmobile Race Series. For details, visit the NVSRS website at http://www.nvsrs.org or email them at info@nvsrs.org. (715) 493-4981 or (715) 272-1722

February 26, 2011 Great Northern Sno-Cross Series, in Eagle River.

March 5 & 6, 2011 Klondike Days – Voted Wisconsin’s #1 Winter Festival! Held in Eagle River, take a trip back to the pioneer days with River Red’s Rendezvous, witness an actual Lumberjack competition and learn about our great history with the Native American cultural exposition. Sleigh rides, dog sled races, snowshoe races, food, arts and crafts, the list goes on and on! Visit Klondike Days.org or call 1-800-359-6315

 March 19, 2011 3rd Annual Ice Golf Tournament At The Black Bear Lodge Benefiting the Vilas County Food Pantry. Held from 9am – 2pm on Little St. Germain Lake. Includes 9 holes of golf, appetizer spread at the Bear’s Den, trophies, raffles and door prizes. Special package prices available! Click for more information

March 18-20, 2011 Ice Masters 3 on 3 Hockey Tournament – Held at the Eagle River Ice Arena. For more information contact Randy Athens at 715-479-3471