Home sales in metropolitan Milwaukee and the state have been full-steam ahead for some time, but the coronavirus pandemic could have an immediate cooling effect, says the Greater Milwaukee Area Association of Realtors.
GMAR reported that home sales were up 7.4% in February over the same month in 2019, with a total of 1,116 sales in the area. It was the third February in a row with more than 1,000 sales in metro Milwaukee, with the second highest number of homes sold in the month of February in the area in last 20 years (the highest was in 2006).
Home sales statewide similarly had a strong winter. Although February sales in the state were down slightly by 0.9%, sales over the last three months topped 14,000 for the first time, according to the Wisconsin Realtors Association.
But just like many industries, residential real estate faces uncertainties as the novel coronavirus known as COVID-19 continues to spread across the globe, including in the U.S. and Wisconsin.
Mike Ruzicka, president of GMAR, said the likely effects of the outbreak won’t be comparable to the financial crisis of 2008 and ensuing economic recession. That’s because the 2008 downturn was directly related to the housing market.
“I think (the coronavirus impact will be) a lot closer to 9/11 than anything else in the last 30 years or so,” he said.
After the Sept. 11, 2001 terrorist attacks, the housing market was put “on hold” for about a month but normalized shortly after. Ruzicka said this is a better comparison to the COVID-19 outbreak because it was not directly related to real estate.
Ruzicka said the housing market is still benefiting from strong jobs numbers and low interest rates. He said a realtor told him recently that traffic on their website was up over the weekend, with people presumably scouting out prospective houses.
But things could change, depending on the length of the outbreak and whether it leads to a weaker job market.
“Everyone is just kind of holding their breath,” he said.
In the four-county metro region, February home sales were strongest in Ozaukee County, which saw a 35.8% uptick year-over-year. Washington County sales were up 2.8%, Waukesha County sales were up 8.2% and Milwaukee sales were up 2.6%.
Sales in Racine County were down 16.4% in February. Sales were flat in Walworth County and up 9% in Kenosha County.
Perhaps the biggest drawback to an otherwise strong Milwaukee-area housing market has been the lack of available homes, especially those priced $300,000 and under. Inventories in February showed things haven’t changed on that front.
The seasonally adjusted inventory level for February was 2.8 months, the same as January and slightly lower than the 2.9 months of inventory in February 2019. An inventory level of 2.8 months means it would take that many months for the number of homes currently on the market to be sold.
Generally, six months’ worth of inventory indicates a balanced market. Anything above that indicates a buyer’s market, and below it is a seller’s market.
Statewide inventories dropped to 3.4 months of supply. Steve Beers, WRA chairman, said every region in the state is now considered a seller’s market.
“Supply was tightest in the more urban areas, but even rural areas slipped below 6 months of available inventory,” Beers said in a statement. “The large metropolitan areas had just 2.9 months of available supply in February; followed by micropolitan areas, which have a population between 10,000 and just under 50,000 residents, which had 3.8 months of supply. The small, rural counties with under 10,000 people had 5.5 months of available inventory in February, down from 6.5 months a year earlier.”