UNIVERSITY OF WISCONSIN River Falls
St. Croix Valley Dashboard for October 2016 Released
The UW-River Falls Center for Economic Research (CER) in partnership with the St. Croix Economic Development Corporation (SCEDC) has released the latest edition of the St. Croix Valley Economic Dashboard. The dashboard is a snapshot of economic conditions in labor, consumer, agricultural and housing markets for the seven county St. Croix Valley. It presents the latest available data in one convenient package and can be viewed on the CER's website at www.uwrf.edu/cer.
The Local Housing Market
The months of housing inventory estimates how many months it would take to sell all currently listed homes if the number of homes sold remains constant at current levels. The sale to list price ratio is the median sale price as a percent of the median listing price. The closer this ratio is to 100% the closer listing and sale prices match. A high ratio is an indicator of a seller's market and a low ratio is an indicator of a buyer's market.
The sale to List Price Ratio seems to be deteriorating for Polk and Pierce counties drastically. Polk county is badly affected. Polk has reflected a huge fall in sale to List Price Ratio with a change of -55.1%, comparing to last month. The housing inventory continuous to be low. This is because of multiple reasons such as mid-level home buyers find bigger houses unaffordable. Also starter home buyers are unable to move up the next tier, their homes are locked up and are not re-entering the market. A certain section is still recovering from the financial crisis. Addressing the widening price gap between mid-level starter homes and next -level-up homes would solve the issue to an extent.
The US Economy
Output. Overall the economic outlook for 2016 continuous to look good. Real GDP grew at an annual rate of 1.10 percent in the second quarter of 2016, which is slightly better than previous quarters. Growth has improved but it is still less than what we would want to see during an economic expansion. The increase in real consumption has contributed to the increase in GDP. The abnormal fall in real investment and real government spending has left room for concern. Employment Cost Index signals very improving labor market. At the same time this might start to cause some inflationary pressure. Initial claims, which is a measure of the number of jobless claims filed by individuals seeking to receive state jobless benefits has gone down by 18,000. This indicates that labor market is doing good and less people are claiming unemployment benefits from the government. This reflects positive impact on employment.
The national job report (Bureau of Labor Statistics Employment Situation Report) states that
the total nonfarm payroll employment increased by 151,000 in August, and the unemployment rate remained at 4.9 percent. According to the CPS (Current
Population Survey) Data the number of unemployed persons was essentially unchanged at 7.8 million. The number of long-term unemployed (those jobless for 27
weeks or more) was essentially unchanged at 2.0 million in August and accounted for 26.1 percent of the unemployed.
CES (Current Establishment Survey) data also reports that total nonfarm payroll employment rose by 151,000 in August, compared with an average monthly gain of 204,000 over the prior 12 months. Employment continued to trend up in several service providing industries.
The change in total nonfarm payroll employment for June was revised down from +292,000 to +271,000, and the change for July was revised up from +255,000 to +275,000. With these revisions, employment gains in June and July combined were 1,000 less than previously reported. Over the past 3 months, job gains have averaged 232,000 per month.
National Inflation and Interest Rates. In the month of August, the Consumer Price Index increased at a seasonally adjusted annual rate of 1.09%. It increased 0.3% in August, as the indexes for shelter and medical care advanced. Fed Chair Janet Yellen during her September 2016 meeting indicated that US growth has strengthened and a future rate hikes will be necessary to keep the economy from overheating. However, given slower Q1, Q2 GDP growth, policymakers decided to keep Federal Funds Rate unchanged at 0.5%.
Minnesota and Wisconsin
Employment. Total nonfarm employment in Wisconsin increased by 9100 and Minnesota increased by 11,300. When Wisconsin lost 2400 jobs in Education and Health Services Minnesota gained 1700 jobs in same sector. In Minnesota, nearly all sectors saw job gains. Most significant job increment reflected in Trade, Transportation and Utilities (2100), Leisure and hospitality (3400) and Education & Health Services (1700). When all the sectors gain jobs in Minnesota, manufacturing sector lost 200 jobs, considering the change from last month. Wisconsin lost 100 jobs in manufacturing, 100 jobs in finance, 600 in information. The BLS reported that the unemployment rate for Minneapolis rose 0.1 percentage points in August 2016 to 3.6%. Minneapolis-St. Paul-Bloomington added 3,500 jobs in August according to the Current Employment Statistics - CES survey report. The unemployment rate changed a little in both the states, 4.2% in Wisconsin, and 4% in Minnesota.
The Wisconsin REALTORS® Association reported that Summer home sales in Wisconsin ended on a very strong
note in August, pushing prices up at a pace well above the rate of inflation. August sales were up 9 percent over August 2015, making this the strongest
August since 2005. The median price rose to $170,000 in August, which was 5.3 percent higher than August 2015. With annual inflation ranging between 0.8
percent and 1.4 percent through July of this year, housing prices are growing at more than three times the rate of inflation.
Housing Market in Twin Cities: According to new data from the Minneapolis Area Association of REALTORS, Metro area is continuing its trajectory of steady, moderate growth in sales and home prices. Pending sales were up 7.9 percent over August 2015. The median sales price was up 5.7 percent over last year. The average time a home was on the market was 55 days - 9 days shorter than last August. The months' supply of homes for sale is 2.8, indicating a continued strong sellers' market. Tight inventory is expected to persist, while new listings were up 2.1 percent over last August, overall inventory dropped nearly 19 percent year-over-year, an indicator of strong buyer demand and seller hesitance. -- Market insights by Edina Reality