The downturn in the housing market that began when the housing bubble burst in 2006 and continued into the Great Recession of 2008-09 has had far-reaching effects. It hit different parts of the country at different times, but the impact was the same: real estate sales took a dive.
Various real estate professionals recall noticing the effects of the real estate crash here in 2008 and 2009. Gary Robinson of Compass Land Consultants in Minocqua says the drop in real estate sales hit this region later than it did in many other areas. “When times are bad,” he says, “people still want to get a place up north.” Even so, once the economy became bad enough, people sat on their money, waiting to see what happened before buying property here, and real estate sales stagnated.
On a national level, real estate has been moving again, and in September the National Association of Realtors reported that existing home sales in August were at their highest rate since February 2007. In the Midwest, existing home sales rose in August by 3.1 percent, up 18.9 percent compared to a year ago.
Things are changing here, too, according to area real estate professionals.
“We are certainly in an improved market in most areas of the Northwoods,” says Erik Johnson, a broker/ owner at ReMax First LLC in Minocqua and the new president of the Northwoods Association of Realtors.
Others in the business echo this, although it appears that prospective buyers are still quite cautious.
“It’s certainly not going gangbusters, but we’re seeing an uptick,” Robinson says. “It’s better than it was a year ago.”
Sandy Ebben of First Weber Group in Rhinelander agrees. “Prices are still relatively flat,” she says, adding that when it comes to high-end homes – those with price tags higher than $500,000 – “that market is really slow.” But the market for homes below that price is better.
In general, says Robinson, those who are buying property are those who are more inclined to take risks. Although the market is better, he adds, “It’s nothing like back in the early 2000s, when it was on fire.”
Even if those who are buying are more likely to be risk-takers, they’re putting a lot of thought into their decisions. Ebben has noticed that buyers are quite cautious and are well aware of what’s available out there. “By the time most buyers get to us, they’ve really done research,” she says.
Adam Redman of Redman Realty Group in Minocqua says he too has noticed that buyers seem to be more cautious. He has also noticed that it’s a little harder for people to sell older homes. “I’m seeing that a lot of the younger buyers want newer homes. We’re also seeing a decent number of moveup buyers,” he notes, and points out an interesting trend that has come about because of a drop in the average purchase price of second homes. “Vacant land has been a little more difficult to sell because the price of homes came down.”
“We still have hesitant buyers looking for not only a great value, but a home or cottage that is what they want,” says Erik Johnson. “Gone are the days when buyers would buy a property just because if they did not buy it, someone else would. They are very specific and want a great value.
“That being said,” he adds, “there is a sense that the bottom has landed and we are moving forward, which is good news for future sellers.”
The other real estate market
Then there’s commercial real estate.
“Commercial real estate in some areas has suffered,” Johnson says. “Most commercial sales have been distressed or bank-owned in Vilas and Oneida counties.” However, the news regarding commercial real estate isn’t all bad. “If you are expanding your business or are starting a business and need buildings or space, there has not been a better time to find quality space at prices that are highly discounted.”
“That market’s starting to come back,” says Ebben. “It always lags behind the residential market.” Activity in the commercial market, she notes, tends to go in cycles and is especially dictated by the economy.
It’s easier in the town of Minocqua to sell commercial properties than it is to sell them in outlying areas, Redman says, adding, “We are seeing some commercial sales. It’s really competitive right now.” It can also still be difficult for buyers to get financing on commercial loans, he notes. And, he says, “There’s an oversupply of inventory for the numberof buyers there are.”
Johnson expects that it will take some teamwork to bolster the commercial real estate market.
“Cities like Tomahawk and Rhinelander certainly have had some strong business from paper mills, manufacturing and resorts, but those are under pressure with the overall consolidation of companies and the slowdown over the last six years,” he says. “There are a lot of talented individuals who have properties in northern Wisconsin and who could help in defining what type of business could function and thrive. We will need some creative townships and cities to offer incentives and investments to bring quality jobs into the area.”
To improve the business climate, and hence the commercial real estate outlook in this area, it’s crucial for communities to work together to bring in industry, Johnson says. “Minocqua does not compete with Eagle River or Rhinelander; we are competing as a region against some major competition like the Wausau area, Appleton/Green Bay, Milwaukee, Madison, etc., to bring some quality industry and small business to the area.”
The state of the U.S. economy is a significant factor in this area’s real estate markets, of course, but northern Wisconsin has characteristics that set it apart from many other regions, some which are advantageous and some which present challenges.
One of the advantages is a consistently healthy inventory of homes on the market in this region, Sandy Ebben says. In some other areas, such as in the southern part of the state, the inventory is down. However, northern Wisconsin is known for an abundance of outdoor recreation and many of the homes here are second homes. Those are considered a luxury, not a necessity, she explains, and the high number of available second homes here tends to skew the amount of inventory upward.
Another very important characteristic of this region is an older demographic than that found in some other areas.
“The aging population is certainly going to create challenges and opportunity going forward,” Johnson says. “There are lots of people who want to live up north and have quality health care and quality housing that is affordable.”
While people want to enjoy the tranquility of the Northwoods and get away from the pressures of the city, they also want to be able to take advantage of 21st century technology while they’re here. This can present a challenge, particularly in a rural, relatively sparsely populated area like northern Wisconsin. To attract future residents to this area, Johnson says, increased access to broadband should be a top priority. “Buyers in the future will not just want it, but will need it,” he says.
What might the real estate industry’s future look like here?
“I would see our resort/lake home market still solid,” Johnson says. “New construction will pick up, and it has already. Commercial real estate in our small towns will have to adjust to our changing demographics.
“Service businesses and health care will be a top priority to maintain the quality future growth and attract new people to our area,” he continues. “I hope to see some innovative business models that will bring some solid jobs, along with connectivity that will allow our future residents and current ones to be able to work from the lake home like they want to.
“Schools with declining enrollment will be a challenge going forward. Most of our school districts have fought the battle so far, but we have lots to do.”
In other words, it takes a holistic approach to ensure the success of the Northwoods economy overall, not just the area’s real estate markets.
“Opportunity for people and quality schools,” Johnson says, “quality health care, along with an incredibly diverse and beautiful area to live, makes our Northwoods area what it is.”