Is the housing crisis over? Could this be the best time to buy? We will never be able to answer that question until we have visited the future. What we do know is, Wisconsin has not seen the plummeting prices experienced in other regions of the US. We have also not experienced the double digit price increases over consecutive years that those regions have experienced. That does not stop people in this region from thinking they can make it rich in Real Estate. The simple fact of the matter is, Wisconsin, Real Estate prices have remained relatively steady throughout the years of double digit increase and during these times of economic crisis. Wisconsin is not the area to test one’s expertise at buying and selling Real Estate for unprecedented profits. Wisconsin Real Estate is known for being a sound investment.
Does that mean Wisconsin will be following much of the country when prices do begin to rebound, or will Wisconsin be a leading indicator in the market? I have not seen data supporting either model. What I do think is, Wisconsin will find it’s own way out of this economic slump, regardless of what the rest of the country does. The banking system in Wisconsin and the Midwest is stronger that other parts of the country. The number of foreclosures are much lower, hence prices have remained strong. People in the Midwest tend to do business the old fashion way. They are drawn to small banks and credit unions. There seems to be a trust in the smaller institutions. And with good reason. Most of the smaller financial institutions have not been effected by the problems plaguing the financial giants. The smaller institutions have very few foreclosures. Their lending practices are may be tighter but they provide a much higher standard of service at a much lower cost. In the Midwest these smaller banks and credit unions are known and recognized for their value.
Since we are experiencing lower highs and avoiding the radical lows in housing prices how might we recognize an upward swing in housing prices? This is the answer everyone is looking for. We may be able to learn a lesson from stocks which operate on a much greater accelerated market. Some of the stocks I have been following lost a great deal of money over a period of just a few months. But in a few weeks some of them have bounced back. Following are some examples.
ABAT 26% gain between Dec 3 - 7
AFSE 36% gain between Dec 13 -16
JASO 72% gain between Dec 16 - Jan 3
MDTL 94% gain on Dec 26
SOL 63% gain between Dec 10 - 30
GRZ 344% gain between Dec 10 - 31
CHP 96% gain between Dec 3 - 20
How quickly will Real Estate prices bounce back? Not as fast as some stock prices but consider a small price increase and what it may cost you. A 1% increase on a $100,000 home will add $1000 to the sale price. On a $200,000 home it will add $2000. If prices were to spike a modest 2.5% a $100,000 would sell for $102,500, a $200,000 home would sell for $205,000.
Here in Wisconsin we have seen prices rise as much as 8% in a year. The one thing statistics do not show is the timing of the price changes. Prices generally rise in the spring. In the past we have seen prices spike as much as 12% in a very short time. A $100,000 home would increase in price by $12,000. In past years the most desirable homes sold quickly at the higher prices. As the year would drag on the homes that had trouble selling would reduce the price to a modest 4% price increase.
Why wait for prices to increase and the inventory to diminish before making the decision to buy? Begin your search today while the choices are plenty and the market is still in the buyer’s favor.
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