I am late with my mid-month newsletter. Since the snow is now gone, I went to Arizona to watch some baseball. I am sorry to say that it appears to be a dismal season for the Brewers. That is another subject.
This time it is Oneida County’s turn to look at the sales price and compare that to the Fair Market Value. What exactly is the FMV and why should I care? Good question. Wisconsin property tax law works like this. Each property owner is supposed to pay their fair share of property taxes based on the estimated value of the property. Each township in the Northwoods has their own assessor; usually someone they hire out. This assessor looks at the property and decides what the value is. This value is the Fair Market Value. Sometimes it is accurate. Sometimes, not so much. I find the local assessors do a great job with land values. They are not as accurate with improvement (home, garage, etc) values.
The chart looks at the FMV vs. the sales price. The closer to 1.0 the closer the sales price is to the FMV. Some people are shocked to learn that their FMV is close to the market value. The truth is that sometimes the FMV is an accurate estimate of a property’s value.
The snow is largely gone. We still have ice but spring begins this week. It looks like spring will come early!
We are looking at Vilas County and the Sales Price/Fair Market Value (FMV) ratio. This is interesting as the FMV is supposed to be near the value. Each town has their own assessor so it has a tendency to vary.
The most accurate assessor appears to be in the Town of St. Germain. The average values fell within 3% of FMV. Interesting point here in that off water homes sold for .7% over FMV. Conover was quite close as well with values within 4%. The assessor that may need a bit of help is in the Town of Boulder Junction where the off-water values are almost 27% low and the on-water values are almost 12% low. In fairness, there were very few sales in the town and a few short sales or foreclosures can really skew the data.
Overall, the Fair Market Values turned out to be reasonably accurate. Several segments actually sold for over FMV including Eagle River City On-Water (+8.5%), Manitowish Waters Off-Water (+4.6%) and St. Germain (+0.7%).
Why is this important? Many people ask what is the value of their home and often the Fair Market Value is a rough estimate.
We have had up and down weather. The trails were terrific and then we shot up to 50 degrees on Saturday. On Sunday, it is cold and snowy. More cold is in the forecast so winter is far from over.
January 2016 is in the books and it is not unlike other Januarys. 69 homes were sold in the month (red line). This compares with 76 in December 0f 2015 (down 9.2%) and 49 in January of 2015 (up 40.8%). January is not a hot month for temperatures or home sales. In 2012 only 42 homes sold. In 2013, only 56 homes sold. In 2014 only 50 homes sold. So in retrospect, January 2016 looks rosy!
We here in the Northwoods are a bit concerned about the rise in short term interest rates. Thus far, they have not much of an effect on 30-year mortgage rates which are still hovering around 3.75%. A bigger issue may be the rise in the capital gain rate. The highest rate rose from 15% to 28%. We will monitor how this effects the Northwoods real estate market.
We have lots of snow and ice. The trails are in great condition and we are at the best time of year for winter activities. The LaBatt’s Blue Pond Hockey Championships are in Eagle River and it is always a great time. Please come up and visit us!
2 weeks ago, we looked at the year-end numbers and we had good news to report. We were up 18.3% in volume in Oneida and Vilas Counties in 2015. So that is great news! It is the first year we sold more than 1200 units since 2005.
Above is our first look at the average sales numbers. The chart above shows the average price for Oneida and Vilas Counties and by on and off water for the last 12 years. There is some mixed news on the price as off-water increased and on-water decreased. The average price for off-water rose from $132,614 to $139,594 (+5.2%)in Vilas County and $112,809 to $127,733 (13.2%) in Oneida County. The average price for on-water fell from $309,822 to $288,746 (-6.8%) and from $293,036 to $275,878 (-5.8%).
How do we interpret the numbers? I am not convinced that lake home prices fell. It is my belief that we simply sold a greater number of lower priced lake homes (and fewer high end homes). Likewise, I believe we sold more higher end off-water homes. When you look at the curves above, off-water homes have remained relatively stable. If we take out the peak years of 06, 07 and 08, even lake homes do not look so bad.
We have lots of ice and snow. Please come up and enjoy!
You all know I love charts. I decided to chart average lake home, off-water homes and lake lots for the past 10 years. The chart above shows this. I think what is remarkable is the stability of the off-water homes vs. the instability of the lake home / lake lot segments. The best year for off water homes was 2007 when the average was $141,325. The worst year was 2012 when the average was $112,272 (-$29,053 down 20.5%). The best year for lake homes was again 2007 when the average lake home sold for $414,396. The worst year was unfortunately 2015 when the average sold for $300,191 (down $114,205, -27.5%). The best year for lake lots was 2006 when the average was $192,852. The worst year was 2014 when the average sold for $122,527 (down 36.4%, -$70,325).
What conclusions can one draw? From the chart, if you threw out 2007 and 2008 peaks, lake homes would be more stable than one once thought. Still, average lake home prices are still down $50K from 2005. Off water homes are pretty stable as those are mostly purchased by full-time residents (as opposed to area visitors). Lake lots are simply unstable. We simply have not yet seen a recovery here in the Northwoods.
We have had a very warm early winter. We have very little snow and ice and are hoping for a grand entrance by Old Man Winter in the next week. Merry Christmas and Happy Holidays!
The month of November continues the strong streak for home sales in Vilas and Oneida Counties. The red line above shows the number of homes sold. The blue line shows the number of homes listed. A drop in home sales is typical for this time of year so home sales did drop from 149 units in October to 98 homes in November (down 34%). November of 2014 saw only 73 homes sold so we were up 34% from one year ago. Year-to-date figures show 1128 homes sold in 2015 and that compares with 953 homes during this same period in 2014. The important takeaway here is that year-to-date we are up 18.3% in volume.
Our summer season was stronger than it has been since 2008. Our streak of over 100 units has been snapped (just short by 2 units). We are still struggling with average price. Homes priced over $450,000 have been difficult to sell. We have excess inventory in that range as well. So not all the news is good.
December is here. We have ice but not a lot of snow. We are really hoping for more winter! Please enjoy the holiday season!
Mixed news on the average price front. While we are quite pleased with the 16% increase in unit sales, a closer look at the average price is a cause for concern. The chart above breaks down average price by on-water and off-water and then by county here in the Northwoods. The trend in both Oneida and Vilas Counties is similar. Off-water homes seem to be slightly increasing. The average price for on-water homes has fallen slightly.
The question is why? I can only offer an opinion. Off-water homes largely are purchased by a different group of buyers. Many are locals that simply cannot afford to live on-water. The on-water homes are bought by visitors from down state and out-of-state. We still have a large supply of on-water homes. Our supply of off-water homes is more normal. The demand for off-water homes has remained stable. The demand for on-water homes has decreased. The question within the question is why the weak demand for lake homes? I would point to the overall economy. While the Fed believes things are improving, I would respectfully disagree.