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The Madison Real Estate Market-What’s Really Happening?

December 10, 2007

The number of new and used homes on the South Central Wisconsin Multiple Listing Service (SCWMLS) has been steadily decreasing. In October 2007, the number of homes listed dropped by 7.21 over the same period last year. November 2007 experienced a steeper decline of 9.6 percent over this time last year.  This is a strong indication of a market correction and the fact that supply while soon match back up with demand.

 While media reports in California point to extreme negotiations on home prices, this isn’t the case in Dane County. In 2006, homes sold for 98.5 percent of the asking prices, while in 2007 homes are selling for 97.3 percent of the asking price according to a Multiple Listing Services report.  Also according to the MLS, the average sales price of homes has increased by 66.18 percent since 1997. In 2006, the average price increased by 4.22 percent over 2005 – which is a solid and sustainable rate increase.

“In some ways, the extended real estate boom from 2001 to 2005 created unrealistic expectations that housing is a short-term high-yield investment,” said National Association of Realtors Chief Economist Lawrence Yun. “2007 will be the fifth best year for housing on record. Places like Houston, the Kansas City area, Indianapolis, and the vast middle section of the United States offer affordable prices and continued job growth. On either coast, Seattle and Raleigh, N.C., remain solid. And markets that experienced recent growth declines – like Boston, Denver, and Washington, D.C. – have already shown signs of recovery. In short, all real estate is local – conditions vary greatly from one city to the next.”

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