Jim Mulleady

In the confrontation between the stream and the rock, the stream always wins... not through strength but by perseverance!

H. Jackson Brown

The following are from the Northwoods MLS. Volume on-water is down significantly while off-water is down but not far off from 2007. Values are down slightly off-water while values on-water seem to be down more. There really are not enough sales to make these statistically accurate. However, the market that seems to be hurting the most is the $400,000 to $800,000 lake home market. Buyers are rare and Sellers can afford to "ride out" a weak market. Thus, the drop in volume.

The Milwaukee Journal, in their quest to be the newest version of "nattering nabobs of negativity" published an article stating that Wisconsin home vaules "only" increased by 1%. In a nation where housing has lost value in most markets, Wisconsin homeowners actually experienced a value increase. Shouldn't that be good news! You did not lose money! You did not earn as much equity as you did in years past but you did not go in the negative direction!

Here in Vilas and Oneida Counties, we fared even better. The Department of Revenue just published values for 2007 and Vilas County showed a 3.2% increase. Oneida County did even better with a 5.6% increase.

The Vilas County News-Review was negative as well. Their spin was "just a 3.2% increase and a 5.6% rise in Oneida". I spoke with Kurt Krueger of the News-Review and his feeling was that the growth was poor relative to previous years. I complained that growth relative to the rest of the country appears to be terrific! He agreed with me that the choice of of the word "just" was unfortunate.

Signs of life? The units sold in the month of May are the highest since January. 128 units were sold compared with 158 in January. Only 53, 70, and 77 units sold in the months of February, March and April of this year. All of these months were well off the previous years of 2004-2007. However, it is positive news as we enter into the summer selling season. This is traditionally the busiest time of year as the sold units tend to peak in the late summer.

The optimism continues on the listing side as we saw 630 listings in May. That compares with 639 in 2007, the two highest months in the last 5 years.

The Days On Market Report continues to show the large gap between average list and average sell. On the water home average list is over $116,000 over average sold list. That is indicating that we have a lot of inventory that the market is not buying. What is a bit of a concern is the volume of waterfront being sold remains quite low. Only 19 lake homes were sold in all of Vilas and Oneida Counties in May.

Days On Market Report

Active Listings

On Water Off Water

Avg. DOM 169 195

Avg. List $522,223 $178,297

# of Listings 765 757

Sold Listings

On Water Off Water

Avg. DOM 117 179

Avg. List $405,968 $127,414

Avg. Sell $372,184 $121,880

Sell/List % 91.6% 95.6%

# of Listings Sold 19 45

The construction industry should be looking up as 60 vacant lots were sold in May. That is a healthy sign.

Overall, there appears to be optimism as we head into the summer months. Markets in the southern part of the state are reporting brisk traffic including Wisconsin Dells, another recreational market. Hopefully, gasoline will stabilize. It will be an interesting summer. Considering the inventory, the historically low interest rates and the pendulum clearly in favor of the buyers, it is an ideal time to be a buyer.

Real Estate values in Vilas and Oneida Counties do not appear to be falling. However, volume by every measure is down from 25% to 35%, depending upon area. The question is why?

One possible explanation may be simple economics. We all were taught that when demand remains constant and supply increases that prices should fall. Conversely, when demand remains constant and supply falls, prices should increase. Lakefront property is usually owned by affluent sellers who can choose to "ride out a buyers' market." They can decide not to reduce price and continue to enjoy the benefits of lake home ownership.

In these instances, the laws of supply and demand still apply. Supply has remained relatively constant. I think that most practitioners in the area would agree that the number of buyers is reduced thus creating a lower demand. Theoretically, that would result in lower prices. However, lower prices have not yet been detected. Most Sellers have been reluctant to lower the price. So, Buyers have been choosing to walk away resulting in fewer sales.

This is an unusual moment in history. I cannot recall a time when there have been deflationary pressures but no corresponding price decreases. The free market continues to exhibit its power over the market by reducing sales volume.