Over the past few months, I am reminded that I had it all wrong about the economy. Three years ago, I sat down with some good friends who also own small businesses. Out of the six of us, three were somewhat positive about how the economy would fare by 2011 and three were negative. As a glass-is-always-half-full guy, I thought we would have been out of this morass by now.
As I paid my property taxes for this past year, I was comforted by the fact that the check I'm writing is no more than one year ago. In 2011 (property taxes levied in 2010 and collected in 2011), municipal property tax levies among the largest communities in Wisconsin totalled $1.51 billion, up 2.1 percent from the $1.48 billion the prior year. Plus, this year's increase was the smallest in more than a decade.
The biggest reason why the economy has not come out of its three-year slump is that housing values continue to decline. According to this week's release of Standard & Poor's/Case-Shiller home price index for the 20 major metropolitan areas, the sale price of a home has dropped significantly over the past 12 months. In the Twin Cities alone, the average sale price of a home has decreased nearly 12 percent.
I know the value of my home has declined a lot since I built it nearly three years ago in the Village of Lake Hallie. While it's depressing to some extent, I am fortunate that I built the house for the long term and have no plans to sell anytime in the future.
Certainly, foreclosed homes now on the market have impacted the median sales prices. But so long as nine percent of the workforce nationwide is out of a job, the new home building industry will remain stagnant.
Having stated all of this, I still have high hopes for the economy later this year. In talking to builders and associates in the commercial real estate industry, it appears that a number of area businesses are in the process of buying land or an existing building or starting a new construction project. It also seems like financial institutions, although cautious, are starting to lend money to those who are jumping through the necessary hoops to qualify.
Hopefully the worst has passed, but my glass of water is not as full as it used to be.
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