Gorbachev, The Berlin Wall and Louis Vuitton.
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Dave Stark: [432K PDF]
My, my, this was certainly an interesting quarter of activity in the South Central Wisconsin real estate market! For a while there, it was looking like we might start to see an uptick in activity compared with the 3rd quarter of 2006. In fact, note that single family home sales for the third quarter in the combined Dane, Sauk, and Columbia markets are off only 1% from the same quarter of 2006. For the year, they’re off only 3%. Condo sales are off a little more, falling 14% for the quarter and 11% for the year. As we said in our last edition, the market appeared to have settled into a groove, down roughly 10-12% from the unrealisticallyfrantic 2005 pace.
And then, in mid August, the Great Sub-Prime Fiasco hit the national media like a nuclear bomb, and things changed dramatically. Within the third quarter numbers, reported closings in September are off nearly 24% from last September (as of this writing*). That shows you just how drastically things changed in mid-stream. The sensational reports speculating that Countrywide might go bankrupt seemed to throw the market into a kind of paralysis, and buyers scuttled to the side lines again just when they seemed to be finding the courage to come back onto the field.
Unfortunately, as has been the case throughout this period, the perceptions the public is being left with range from overstated to just plain wrong. While the events of August were real, our experience is that most local home buyers and sellers don’t understand what it means for us. The media has done a very poor job of distinguishing between what’s going on nationally and what’s going on here locally. The impression many people have is that foreclosures are skyrocketing, foreclosed homes are flooding the market, driving up inventories, lenders are going out of business so that home loans are no longer available, interest rates on the few loans that are available are rising, and home prices are plummeting. None of these things are remotely true in our local market. But as the September closing numbers suggest, these perceptions do have an influence on people’s behavior in the short run. Yes, something is going on, but what is it, really?
Dave Stark is a longtime friend and client. www.starkhomes.com