Monthly Market Update: Housing Statistics for Dane County for October 2018
Sales continued to be strong in October with only modest increases in inventory. Despite the tendency to have steadily decreasing sales as we get farther into fall, there was a record-setting 633 sales for October, driven in large part by an increase in condo sales. The inventory rose modestly, up to 2.2 months of inventory versus 2 months in 2017 (a balanced market is considered to be 6 months of inventory when you take the average rate of sales per month and divide that into the number of available listings).
It is not surprising, with the continued buyer demand and limited inventory, that the year-to-date median price rose again to $278,000, up from $265,000 for the same period last year. However, there may be some pressure on this in 2019 if the interest rates continue to rise. They are up to 4.9% compared to 3.9% for Oct. 2017.
The economy continues to roll along with record low unemployment numbers, increased job creation, and rising wages. Signs are favorable for a good start to 2019, with the inventory continuing to be tight in all likelihood. One note of caution is that the rising interest rates could take some buyers out of the market, especially if they are on limited budgets.
Summary of the data for the month of October 2018:
- Number of sales of single family homes: 633 (608 in 2017)
- Number of new listings: 677 (594 in 2017)
- Total listings available end of October: 1450 (1345 in 2017)
- Number of months inventory available: 2 mos. (2 mos. in 2017)
- Interest rates up to approximately 4.9% (up from 3.9% in 2017)
- Median price of single family homes and condos YTD sales: $278,000 ($265,000 in 2017)
Remodeling—Cost vs. Value
Every year Remodeling magazine does a survey of contractors and cross references with Realtors® to estimate the return on investment for the most common remodeling projects that people do. The results of this survey can be very instructive when it comes to decisions about which projects make most sense when a sale might be in your future. Here is a link to the Realtor.com article which talks about some of the overall conclusions and which includes a link to the Remodeling magazine article: https://www.realtor.com/news/trends/top-renovations-to-boost-home-value/
But allow me to touch on some of the most important take-aways from the survey:
1) Large Renovations are not as Valuable as They Were
The return on investment for a large reno is down from 64% from a year ago to 56% in 2018. Many Realtors® feel we are peaking on sales prices and thus the higher the cost of a renovation the closer to that price ceiling you get.
2) Changes to Tax Law are Affecting Remodeling Values
The new tax law which is in effect for this year has had a limiting effect on how many people will be able to deduct mortgage expenses and how much those people will be able to deduct on their taxes. This in turn affects the value of a given project.
3) Material Prices are Up
Due to the unusual number of catastrophic events around the country, like floods, hurricanes, wild fires, and mud slides, there has been a rather large increase in the demand for building materials and for workers. This has had the effect of driving up building costs all across the country. You can’t expect to recoup the higher cost of the project especially since we are likely bumping up against the value ceiling already.
4) Curb Appeal is King
As they have pointed out to us in previous surveys, the best return on investment is with projects that improve curb appeal. The number one project being a garage door replacement. A close second is adding a manufactured stone veneer.
Each Scenario is Going to be Different
While the results of the survey are instructive and helpful, it is still important to consult with your Realtor® about your particular situation. There can be specific circumstances about your home, your neighborhood, or about the market in general that would suggest a different approach. Don’t hesitate to ask me if you want help evaluating the benefit of a project.