Sales of existing homes in the four-county Milwaukee area rose 4.2% last year, but prices continued to drop - in some cases reaching average lows not seen since 2001.
Economists said Wednesday, however, that unless the economy takes a bad turn, they believe the worst likely is over for the existing-home market, and prices should begin to slowly rise as unemployment decreases and consumer confidence grows.
Still, 2011 was a tough year in residential real estate in the metro area, as foreclosures held prices down - especially in Milwaukee County - and there were many more homes on the market than buyers. Financing also remained difficult for some people interested in buying a home.
"I'll tell you, nobody is sorry 2011 is gone," said Mike Ruzicka, president of the Greater Milwaukee Association of Realtors.
Realtors sold 12,888 homes in 2011, compared with 12,367 in 2010, according Metro MLS Inc. data released Wednesday.
The average price of homes sold in Milwaukee County last year was $128,004, down almost 11% from 2010. The last time the average price was lower was in 2001, at $125,591. Sales increased in Milwaukee County by 3.4% last year.
In Waukesha County, the average sale price was $260,179, which is the lowest since an average of $256,244 was recorded eight years ago. Sales rose 6.6% in Waukesha County.
The average home sale price in Ozaukee and Washington counties was the lowest for a full year since 2003.
Ruzicka said the market appears to have bottomed in the third and fourth quarters of 2010 into the first quarter of 2011. After a generally soft year, it took an uncharacteristically large number of sales in the last two months of 2011 to push the annual sales figure past 2010, Ruzicka said. He attributed the strong finish to a rise in consumer confidence.
That theory was backed by Russell Kashian, a University of Wisconsin-Whitewater economics professor who tracks housing in the state. He said consumers who still are employed sense that they've weathered the economic downturn, restoring some confidence.
While he said more turbulence could lie ahead in the residential real estate market - and home-building will be slower to come back - it is beginning to recover and return to a pre-bubble, pre-recession climate.
"I think we're back to the era where people are buying a house primarily as a place to live and not primarily as an investment. That's a secondary thought," Kashian said.
Professor Morris A. Davis, a real estate expert with the University of Wisconsin-Madison School of Business, said the risk of prices falling further is fading, although a blowup of Europe's economy could slow a recovery.
"But my own view on this is there's not much downside risk to house prices," Davis said. "I'm not a financial planner or anything like that, but I've been encouraging people to buy homes. Most metrics I look at suggest that housing is fairly valued right now or even is undervalued."
Davis said he is forecasting "a few percent" growth per year in housing prices over the next 10 years as the economy heals and more people are employed.