June Housing Market Update – Shattering Sales Records
June Housing Market Update – Shattering Sales Records
It is currently a Sellers’ market in Milwaukee, especially for homes $500,000 and below. Housing inventory for homes in this price range is at an all-time low with not enough inventory to meet demand. Although the WRA has reported that homes sales have slowed, in my experience, this is primarily due to the impact of very low housing inventory. Demand is much higher than supply for homes in this price bracket which has led to an increase in sale prices over listing price. We are frequently seeing multiple offers, and for some properties, the demand has been so great that we’ve implemented a cut-off time for offers due to the sheer volume of showings.
If you own a home that is valued at $500,000 or lower and you are considering putting it on the marketing, it may be a good time to make the leap. Sales for homes over $500,000 are still very strong in the hot communities: Shorewood, Wauwatosa, and Whitefish Bay.
Although COVID-19 has impacted to many businesses, Powers Realty Group was able to remain strong in the face of a changing market. Our agents have seen a significant increase in their overall production over 2019 as they helped homeowners and Buyers manage their way through the adversity. I was determined, once our business was deemed essential, to steadfastly work through the pandemic to support our clients. I stepped out comfortably into my leadership role to help clients and agents proceed and succeed despite daunting circumstances. I felt we had a responsibility to serve our clients and ensure we could and did so responsibly and safely through video calls and in-person showings following CDC Guidelines.
Now halfway through 2020, the results are truly remarkable! Half of Powers Realty Group agents’ sales production outstrips last year, and some by over 400%. I instilled in our agents a desire to succeed along with a plan to make it happen, along with guidelines for being vigilant and careful but not stopping. We persevered during a terrible situation, which epitomizes who I am -- when the going gets tough the tough get going. In a recession, our boutique firm has always excelled. We started the company in a recession and shattered records, and here we are doing it again!
WRA MARKET OVERVIEW for WISCONSIN:
The severe economic consequences of COVID-19 had a significant impact on existing home sales in May, according to the Wisconsin REALTORS® Association (WRA). In its monthly analysis of home sales, the WRA found May home sales fell by 25.8% on a year-over-year basis. Median prices continued to rise at a robust pace, increasing 6.2% to $214,000 in May relative to May 2019. Comparing the first five months of 2020 to that same period last year, existing home sales slipped 5.5% and the median price rose 7.9% to $205,000.
“When the president announced the National Emergency in mid-March, followed shortly thereafter by the Safer at Home order by the governor, we expected to see home sales fall dramatically beginning in May,” said WRA Chairman Steve Beers. Regional sales in Wisconsin were remarkably consistent with five of the six regions down between 20.2% and 25.5% over the past 12 months. Only the Southeast region dropped by a slightly higher margin, falling 30.5% over the May 2019 to May 2020 period. “Home sales that closed in May were likely under contract in late March or early to mid-April, and this is the time when a lot of potential buyers and sellers decided to sit tight,” said Beers. He noted that we’re still in for a rough summer in terms of home sales, but the re-opening of the state economy should help.
“Wisconsin REALTORS® are carefully following CDC guidelines to ensure buyer and seller safety; and while inventories remain tight, there are homes available, and mortgage rates have never been better,” he said. The 30-year fixed-rate mortgage fell to 3.23% in May, which is a new record low.
“Home prices are still appreciating quickly, which isn’t surprising, given that inventories fell dramatically in May,” said WRA President & CEO Michael Theo. Statewide, there were just four months of available supply in May 2020, down from five months a year earlier. The urban regions of the state were particularly tight, with just 3.3 months of supply in metropolitan counties, suggesting a strong seller advantage. In contrast, rural counties were more balanced with 6.5 months of available inventory. “Even with decreasing supply and rapid price appreciation, Wisconsin housing is still very affordable, thanks to record-low mortgage rates,” said Theo. The Wisconsin Housing Affordability index shows the percent of the median-priced home that a qualified buyer with median family income can afford to buy, assuming a healthy 20% down payment and the balance of the home financed with a 30-year fixed-rate mortgage. The index fell just 2% from 199 in May 2019 to 195 in May 2020. “These excellent mortgage rates mean that affordability barely changed even as home prices rose and median family income fell,” said Theo.
“The longest economic expansion in U.S. history is now over, and the economy is officially in recession,” said David Clark, Marquette University economist and consultant to the WRA. The National Bureau of Economic Research recently announced that the latest recession officially began in February of this year. Statewide, the unemployment rate dropped slightly in May from the previous month. The seasonally adjusted rate dropped from 13.6% in April to 12.0% in May. “While the re-opening of the state economy has helped, we still have a long way to go to return to pre-recession levels of employment,” said Clark. Total nonfarm employment is down by more than 387,000 jobs compared to May 2019, with the biggest share of job losses in the service sector. “Recessions typically hurt the housing market when demand tails off as the recession deepens, but there are reasons to suspect less damage to markets in this recession,” said Clark. He noted that favorable mortgage rates should keep demand from falling significantly, and the aging baby-boom population will improve the supply situation over the next one to two years. “We could be returning to a more balanced market,” he said.
Theo stressed that there remain good opportunities for buyers in this market. “There’s no doubt that we still have tight housing supply in the state, but a REALTOR® who is experienced can still find the home that matches your family’s needs, and the record-low mortgage rates have kept Wisconsin housing among the most affordable in the country,” said Theo.
Powers Realty Group is a distinctive boutique real estate broker focused on the needs of customers delivering exceptional results. We are the trusted local experts. Call us today about buying or selling your home.Call Suzanne Powers