UNIVERSITY OF WISCONSIN River Falls

St. Croix Valley Dashboard for December 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.

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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.

Buyers market has taken a little lead in Pierce and Polk counties in October when compared to last month's data. The Sale to List Price Ratio has gone down from 95.5% and 90.8% to 83.2% and 89.8%. Dunn's housing market is highly driven by the sellers market and sale to list price ratio reflects 94.2% against the 90.8% last month. In the long run St. Croix's county',s ratio looks good for sellers. In comparison with October 2015 data, ratio has increased by 10.6%. This trend is applicable to Polk county as well. The ratio for Polk increased by 14.4% when compared to October 2015 data. Months of Housing Inventory has reduced for Dunn & Pierce counties, which means the waiting period for the houses to get sold reduced for these 2 counties (by .1% & .9%). Polk county's housing inventory did not reflect any change but St. Croix's housing inventory increased by .07% and reflects 4.4 months now.

The US Economy

Output. The economic outlook for 2016 continuous to look better. Real gross domestic product increased at an annual rate of 3.2 percent in the third quarter of 2016. Real GDP increased 1.4 percent in the second quarter. The Real consumption factor continuous to increase and currently marks increase of 2.77% in Q3. According to the bureau of Economic Analysis of U.S department of commerce, the increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), an acceleration in exports, an upturn in federal government spending and private inventory investment that were partly offset by negative contributions from residential fixed investment and state and local government spending.The table reflects the positive growth in real consumption(2.77%) and real investments (2.06%) Employment Cost Index continuous to be negative this means costs of labor for businesses is reduced. Initial claims went down by 21,000 in December. This indicates that labor market is doing well and less people are claiming unemployment benefits.

Labor Market. The Employment Situation Report,(Bureau of Labor Statistics) released on December 4, 2016 reported that The unemployment rate declined to 4.6 % in November, and total nonfarm payroll employment increased by 178,000. Major employment gains occurred in professional and business services and in health care.

As per the Household Survey Data, In November, the unemployment rate decreased by 0.3% point to 4.6%, and the number of unemployed persons declined by 387,000 to 7.4 million. Among the major worker groups, the unemployment rate for adult men declined to 4.3 percent in November. The rates for adult women (4.2%), teenagers (15.2%)Establishment Survey Data reported that Employment in professional and business services rose by 63,000 in November and has risen by 571,000 over the year. Accounting and bookkeeping services added 18,000 jobs Over the month. The sectors which reflected continuous upward trend are administrative and support services (+36,000), computer systems design and related services (+5,000), and management and technical consulting services (+4,000)

Health care employment rose by 28,000 in November. Over the past 12 months, health care has added 407,000 jobs. Employment in construction continued on its recent upward trend in November (+19,000), with a gain in residential specialty trade contractors (+15,000). Over the past 3 months, construction has added 59,000 jobs, largely in residential construction.In November, average hourly earnings for all employees on private nonfarm payrolls declined by 3 cents to $25.89. Over the year, average hourly earnings have risen by 2.5 percent. Average hourly earnings of private-sector production and non-supervisory employees edged up by 2 cents to $21.73 in November.

National Inflation and Interest Rates. US Inflation rate hits 2 year high of 1.6% in October. Consumer prices in the United States went up 1.6 % year-on-year in October of 2016, up from a 1.5 % rise in September and in line with market expectations. It is the highest inflation rate since October of 2014, reported by trading economics.com. The Consumer Price Index (CPI) data released by the U.S. Bureau of Labor Statistics reported that the CPI for All Urban Consumers increased 0.4 % in October on a seasonally adjusted basis, Over the last 12 months, the all items index rose 1.6 % before seasonal adjustment. Increases in the shelter and gasoline indexes in September were the main causes of the rise in the all items index. The gasoline index rose 7.0% in October and accounted for more than half of the increase in the all items index. The shelter index increased 0.4 % for the second straight month. Economist.com on 10th December reported that The Federal reserve will increase the rates again on December 14th after the December 2015 hike to a target range of 0.5-0.75%. Economist.com commented that Federal Reserve's chairwoman Janet Yellen, is tweaking monetary policy at only a cautious annual pace.

Employment. In October, total nonfarm employment in Wisconsin increased by 10,400 and Minnesota decreased by 12,500. When Minnesota lost 2200 jobs in Education and Health Services, Wisconsin gained 2100 jobs in same sector. Wisconsin recorded job gains nearly in all sectors, whereas Minnesota lost jobs in almost all the sectors except in financial activities. In Minnesota most significant job loss happened in Professional and Business Service (-2400), Trade, Transportation and Utilities (-2500), Leisure and hospitality (-3900) and Education & Health Services sector (-2200). Wisconsin, at the same time gained 2400 jobs in manufacturing, 4400 in government, 200 in information and 2400 in leisure and hospitality. As per BLS data that the unemployment rate for Minneapolis decreased by .2% in October 2016 to 3.3%. The unemployment rate remains unchanged changed in both the states for the month of October. 4.1% in Wisconsin, and 4% in Minnesota.

Housing Market. The Wisconsin REALTORS® Associationreported that the strong market in October has continued to push median prices higher, rising 6.5 percent to $165,000 over the past 12 months. Prices for the first 10 months of 2016 were up 5.1 percent over the same period in 2015.WRA board chairman Erik Sjowall commented ‎with nearly 70,000 homes sold thus far, we should surpass last year's total sales. At the current pace, home sales for 2016 are projected to reach 80,000, compared to just over 76,700 homes sold in 2015. This is impressive given the fact that inventory levels continue to fall in the state". As per WRA Low inventory levels are a concern, especially in our metropolitan counties, which had just 4.6 months of supply in October. As per WRA data, housing affordability remains quite strong in the state.

The Wisconsin Housing Affordability Index shows the fraction of a median-priced home that a borrower with a median family income can afford to purchase, assuming a healthy 20 percent down payment and the remainder financed with a 30-year fixed mortgage. WRA President & CEO Michael Theo stated that the pressure on housing prices has been growing as our inventories have declined, and the combination of higher interest rates and higher prices will cut into affordability going forward, but it's important to remember that housing prices tend to soften during the winter months

-- 2016 October Home Sale Report

  • Housing Market in Twin Cities: According to new data released by the Minneapolis Area Association of REALTORS® though real estate activity begins to wind down, new signs of seller confidence are starting to appear in the final quarter of 2016 and with good reason. Many Twin Cities metro localities and certain price points continue to see strong sellers€, markets. As per their data, new inventory did not satiate buyer demand, inventory was still down 16 percent from last year. As per Edina Reality since Mortgage rates continue to be low and , the housing market will be support more buyers to enter the market.

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UWRF - Center for Economic Research
College of Business and Economics

cer@uwrf.edu
Phone: (715) 425-4993
Fax: (715) 425-0707
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