Real Estate Perspectives
March 17, 2024 | Suzanne Powers

Housing Market Update

Stay informed about the latest trends in the Milwaukee housing market with this comprehensive update from Suzanne Powers. Learn about the shift towards a buyer's market, the impact of renovation costs on house sales, and the effects of the Fed's inflation policy.

Housing Market Update

I am sending out a housing market update to all my seller’s this morning. The consumer confidence index for February was lower than expected and we are seeing recessionary trends emerge quickly in the housing market despite lower than expected inventory rates. Softening can be felt throughout the market, but especially in the Luxury Housing sector of the market as inventory continues to grow quickly in homes over one million dollars.

As we enter the mid-month of March ( always a critical benchmark month for house selling ) in Milwaukee, I wanted to provide every seller with an update on the current state of the housing market and how it appears to be shaping up. This is in an effort to give you valuable information on what trends we are seeing at every price point so that you can make good informed decisions on your selling process. I am meeting with every seller right now to ensure we are on track for a sale by mid-June as the market will get even tougher as we head into the summer of 2024.

It's important to note that we are currently experiencing a significant shift towards a buyer's market. This means that there is an increase in inventory, resulting in more competition among sellers. Additionally, we are observing more frequent price drops as sellers adjust their listings to attract potential buyers. However, despite these adjustments, there are noticeably fewer buyers in the market compared to previous years. The robust spring market is quiet in comparison to the last 5 years with only low inventory as the driver in home sales which we expect to change as more sellers who NEED to sell are entering the market.

Home Renovation Costs and their Impact on House Sales:

One trend that stands out is the buyer's preference for properties that are in move-in ready condition, particularly those with newly renovated kitchens and bathrooms. This reflects a shift in consumer expectations and highlights the importance of presenting your property in the best possible light and at a price that is competitive and perhaps lower than the previous year’s comparable sales to attract potential buyers and secure offers. Home sellers who have not updated their kitchens and baths will likely sell well below market value to entice buyers to write an offer as the cost for renovation and the wait times for supplies and contractors can be years out.

Today’s buyers do not have out of pocket cash for renovations and obtaining a home equity line of credit on a new purchase at 8% interest is more than unlikely in today’s lending environment. Houses that need renovation are the most difficult to move and sell well below what they have traditionally sold for due to the cost of renovation. The price per square foot calculation does not work for these properties as you must take into account the cost for renovation when pricing the home for today’s market.

The impact of Fed's inflation policy on the housing market and the reluctance to lower interest rates this spring is impacting house sales negatively. The policy aims to avoid wider economic fallout by maintaining higher interest rates. However, it has resulted in the housing industry facing challenges, contributing to the current recessionary conditions. Buyers are pulling back.  This may lead to negative consequences and there is a risk of the Fed triggering a wider economic downturn if the economy is not managed carefully.

What we are seeing in the market is important. I always want to bring seller’s good news. This news is impactful in developing a strategy and a timeline for your success.  Many sellers wanted to “test” the market, but unfortunately the time to do that has indeed passed. I am sounding the warning bell to help every seller get the most money out their asset. As your trusted real estate partner, I am committed to navigating these challenges with you and ensuring the best possible outcome for your property sale.

Thank you for your trust and partnership – Suzanne Powers

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