For years after the Great Recession housing market collapse, Realtors pointed to depressed housing values and low interest rates and said there had never been a better time to buy a home.
But, until recently, buyers were not interested. Potential homebuyers lacked confidence in the future of the economy, they were worried about the stability of their jobs, they struggled to sell their own homes (which had declined in value) and they wanted to wait until the housing market decline hit bottom.
This year, as the economy has been on a slow but steady recovery pace, buyers have returned to the housing market to take advantage of prices and interest rates that remain low, for now.
For the first five months of the year there were 6,668 single family home sales in the four-county metro Milwaukee, an increase of 11.1 percent compared to the first five months of 2012 and up 44.1 percent compared to the first five months of 2011, according to the Greater Milwaukee Association of Realtors (GMAR).
“The numbers we’ve seen have been extremely positive,” said GMAR president Mike Ruzicka. “There is just a ton of activity. Realtors are as busy as they have been since before the recession.”
“The first half of the year has been a tremendous success,” said Kevin Donnell, president and chief operating officer of First Weber Group. “Buyer demand is strong. It has been a very robust, active market.”
As the economy has recovered buyers have become more confident in their own job security and have entered the housing market to take advantage of the prices that were driven down during the Great Recession and the still low interest rates, Donnell said.
“There just has never been a better time for people to jump in,” he said. “I think things (in the economy) have stabilized enough. People have confidence to proceed with their plans.
Donnell said he expects the housing market to remain strong during the second half of the year.
“We see absolutely no evidence of a slowdown in buyer traffic and buyer demand,” he said.
“It’s really been a snowball effect,” Ruzicka said. “In 2012 people got the best deals. That was the bottom of the market. Now we’ve got buyers like crazy. (But) the deals are pretty much gone.”
With more buyers shopping for homes the sellers are also returning to the housing market. In May, the most recent month of available data, listings in the metro area were up 9.5 percent, according to the GMAR.
When prices plunged during and after the recession, many potential home sellers decided not to put their home up for sale choosing to wait for values to improve. The number of listings declined dramatically.
Donnell and Ruzicka both say the market now has an inventory of about six months (the time it would take to sell all of the homes currently on the market). They described that as a balanced market overall, but there are inventory shortages creating a seller’s market in some segments of the area’s housing market, they said.
“There is definitely a need for (even more) listings out there,” Donnell said. The increase in listings has not been enough to keep up with the rise in demand, he said.
The combination of more buyers and lower inventory levels relative to demand has finally started to help move home prices in the area upward. Second quarter data was not available at press time, but Ruzicka said he expects home sale prices in the Milwaukee area to be up 4-6 percent in the quarter. Some sellers are once again getting competitive bids for their homes, he said.
Average home sale prices in the area are up, but primarily because more higher-priced homes are selling, Donnell said. However there has also been some price appreciation, he agreed.
During and after the recession foreclosures and short sales helped drive down the appraisals for all homes in the market. At the bottom of the market foreclosures and short sales accounted for 40 percent of all home sales in the area, Ruzicka said. Now less than 10 percent of home sales in the area are foreclosures or short sales, which benefits the entire market, he said.
“We’re back to normal (with foreclosures), maybe a little higher than normal,” Ruzicka said. “They are not really impacting the value anymore.”
Donnell said foreclosures and short sales are dwindling, but they continue to be a drag on home value appreciation. Until home values increase significantly some homeowners that need to sell will be underwater and will opt for a short sale or foreclosure, he said.
Overall, the improvements in the housing market are being welcomed at long last by home sellers and Realtors in the region.
“Everyone has kind of collectively breathed a sigh of relief,” Ruzicka said.
