Jim Mulleady

Winters are long here in the Northwoods. That is not a bad thing. Few things are more exhilirating than snow shoeing or skiing and coming in to a warm fire!

One of my personal joys is listening to the lake. In the summer, I never tire of hearing the waves lapping at the shoreline. In the winter we have two states: we are either making ice or losing ice. Its a good thing to have a foot or more of ice underfoot when snowmobiling or ice fishing.

When ice is being "made", it is a noisy process. A large crack is sounded as the ice expands into yet more ice. When the weather is quite cold, the cracking becomes much more frequent. Its actually a very comforting sound to those of us who travel regularly across the ice.

While lying in bed, I have been hearing a lot of cracking of the lake assuring me that I soon will be out on the ice again, enjoying the beautiful Northwoods winter!

It's getting more difficult to put a positive spin on things. The pink curve says a lot of things about the market. Our typical hot season is now passed and the mountain of sales units that we usually build in July through October is decidedly clipped this year.

The positive spin I will point out is that our supply is coming down. Our sellers are a rare breed. Most can afford to ride out a storm. They are not willing to accept offers 40% below the asking price. You can see that the number of new listings continues to fall. We still have an outstanding inventory of properties.

President-elect Obama has tapped the National Association of REALTORS for ideas on how to improve the real estate industry. A possible plan is for a reduced interest rate, in the area of 4.5% for first time home buyers. This will not be for refinancing nor will it be for second homes. Our market is almost 80% recreational or second homes but this plan offers a great deal of promise. A healthier urban/suburban market will trickle down to improve our market here in the Northwoods.

Low interest rates, terrific inventory and slow sales all add up to one thing: it's a great time to be a buyer!

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."

- Cicero - 55 BC -

The story behind the story. The Wisconsin REALTORS Association just published their monthly numbers showing the number of sales and average sales price by county. It does not look very good for the Northwoods. Vilas County sales are off by 47%. Oneida County is not far behind -39%. The average home sale price is off from $175,000 to $113,300 or -35.3%. In Oneida County, the average home sales price actually rose from $112,000 to $120,000 or 7%.

On this chart, we track the average selling price of homes on and off water in Vilas and Oneida Counties. The real story is the lack of buyers. We do not have a shortage of money to lend. Banks are ready, willing and able to lend. We do not have a great number of foreclosures here in the Northwoods. That has helped keep values up. The big issue is what happens when the economy heads south. Discretionary spending takes a big hit. 80% of our waterfront homes here in the Northwoods are second homes. At this time, we have very few buyers looking for second homes.

While the numbers appear to be ominous, the reality of the situation is that values have not changed much. The volume of sales is way down and this is the root of our real estate problems here in the Northwoods.

Steady as it goes. When you look at the past 4 years of unit listings and sales in Vilas and Oneida Counties, we have never seen a period where unit sales remained so regular as the past 6 months. May had sales of 128 units, June 123, July 119, August 130, September 121, and October 122 units. The problem with this is we normally see a spike during these months. The last 4 Octobers saw 172 units in 2007, 224 in 2006, 223 in 2005 and 241 in 2004. So, our unit sales are off 29% from 2007. Unit sales are off 45% from 2006.

One would think that with the economy the way it is, that listing activity would be up. The Northwoods' is unique in that many of our Sellers can choose not to participate in a sluggish market. That is reflected in October listing activity with 243 listings versus 365 listings in 2007. Previous years saw 374 units in 2006, and 352 units in 2005.

The Northwoods market is not unique in that we are hurting. Most recreational markets like Maine, Minnesota, and Montana are in similar markets. We still live in a very desirable area that will recover, when the economy perks up.