The southeastern Wisconsin residential real estate market saw a 10.5 percent increase in sales in 2015 compared to 2014, and experts expect an even stronger housing market this year.
Early predictions pegged 2015 finishing about 9.8 percent ahead of 2014, but with buyers still interested through December, the market saw 19,611 total sales last year, compared to 17,749 in 2014, according to the Greater Milwaukee Association of Realtors.
“2015 was characterized by increasing sales, slightly increasing prices and really tight inventory, especially in the fourth quarter,” said Mike Ruzicka, president of GMAR.
In 2014, brokers were happy to see the market changing from a recessionary one filled with distressed properties to one filled with first-time home buyers, people looking for a larger home and empty nesters moving into a new home or condo. 2015 saw a continuation of that, which also meant tight inventory, Ruzicka said.
By the end of 2015, the housing market was down to four months of inventory (the time it would take to sell all of the homes on the market at a given time).
“I think 2016 is going to have more sales – 5 to 6 percent stronger than last year,” Ruzicka said. “We could have even more if we had new construction. This is the third year of real economic recovery. People are starting to make money again and they are feeling better about making a move up.”
Irvine, Calif.-based data analytics company CoreLogic predicts home prices will increase by 5.4 percent in the Milwaukee area in 2016. The company uses several economic variables to come up with its predictions, including state-level forecasts and the number of owner-occupied households in each state. Many factors, including strong demand and tight supply, are contributing to the long-sustained boom in prices, according to CoreLogic.
The hottest areas of southeastern Wisconsin will continue to follow the school districts. After spending a few years in an apartment, first-time home buyers are thinking about having a family and the first thing they often think about is the school district, Ruzicka said.
The Elmbrook, New Berlin, Mequon and Franklin school systems are all well-regarded, but the homes also come with a high price. The average sales price in Brookfield was $315,994 in 2015. It was $247,214 in New Berlin, $415,948 in Mequon and $236,486 in Franklin.
By comparison, the average sale price in Milwaukee County, which includes Franklin, was $160,223 in 2015.
“First-time home buyers are driven by quality schools, but pricing is key,” Ruzicka said. “MPS has its challenges, but they’ve made significant strides. The good schools are really good. Overall, wherever people choose, the market is pretty affordable compared to other areas of the country.”
As the Great Recession becomes further removed from peoples’ minds, their confidence continues to be restored and those who were sitting on the fence will either enter the housing market or upgrade their homes, said Kevin Donnell, president of First Weber Inc.
“I believe 2016 will be an equally strong year (as 2015),” Donnell said. “We’ve already seen a lot of buyer interest starting in January.”