Are Local Home Prices Really Off The Rails?

Let me start with the disclosure that I am no economist. Micro and Macro Economics classes were painful for me in college; Home Economics not so much if we got to eat what we cooked.

Joking aside, I have been both an active participant and observer of the real estate market for over 30 years. And, just like everyone else I hear how we’re in for a big real estate crash, the proverbial Hubba-Bubba bubble is going to pop and homeowners are going to be stuck upside down. My gut says that’s not going to happen in Central Wisconsin. Let me explain my logic.

First, I firmly believe that local residential real estate appreciation stalled for well over a decade after the housing crisis. We suffered the same fate and maybe a fate even harsher then the rest of the country because we didn’t have a bubble to begin with. In October 2011, credit monitoring agency Experian found that eight of the 10 cities with the highest average credit score were in the Midwest and Wausau, WI took the top spot, with an average credit score of 789! We are FISCALLY CONSERVATIVE!

Understandably home prices took a nose dive and then stalled during the Great Recession of 2007 to 2009, but we’re now in the year 2022. So, I beg to ask if it is reasonable to expect a quality, well maintained home valued at $420,000 in 2004 to be worth only $420,000 in 2022? I guess the answer depends on if you are a buyer or a seller, an appraiser or a tax collector. But seriously, real estate is an investment and in a very solid one at that if you look at it historically. I could start doing math for you – please don’t make me – but I think it is fair to say that after 18 years we should expect homes to appreciate even at a modest rate of 4% a year. With that in mind, I beg to argue that we again are not in a bubble but instead in correction mode. Yes, the pendulum swung fast and hard. But, this correction was long overdue.

So, if you are sitting on the fence waiting for home prices to come down, I suggest you may have a very sore bum. While I eventually see the cost of new builds stabilizing as a result of legislation in Madison and supply chain issues resolving, it will take time before we have enough work force housing and inventory to meet the demand. I suggest home prices may stabilize within the next few years, but if you are waiting for a bubble to burst please consider the possibility that   we only have bubblers in Central Wisconsin; not bubbles.