The lack of homes listed for sale in Wisconsin is severe enough that it will cause year-over-year sales declines come late spring and into summer – at a time when sales are at their peak.
That’s the prediction of David Clark, an economics professor and executive associate dean at Marquette University.
Other than a small hiccup last spring, home sales have remained robust throughout the COVID-19 pandemic. This comes from high demand driven by favorable market conditions, including low interest rates.
The only thing holding back sales has been low inventory.
“Our problem is not a demand problem,” Clark said. “Our problem is not a macroeconomic problem. Our problem is a supply problem.”
Clark said the statewide year-over-year sales decline due to the inventory issues probably won’t be seen until after April. That’s because that month last year saw low sales volumes due to the pandemic and a statewide shutdown.
“But when you get into the latter part of the spring, we’re likely going to see (year-over-year) sales figures decline because the inventory simply isn’t there,” he said.
Clark later added, “We will see difficulties meeting last year’s totals when we get into May, June, July and August. Those are our four peak months.”
Metro Milwaukee is already being impacted by low inventories. February home sales dipped 0.7% year-over-year, according to the latest numbers from Greater Milwaukee Association of Realtors. The decline followed a solid start to the year in January.
“The desperate lack of inventory in the market right now cannot be overstated,” GMAR noted in its February home-sales report.
Clark’s comments came during Marquette’s annual residential real estate symposium earlier this week.
Also speaking at the conference, an industry lobbyist laid out ideas to address the inventory issue.
It starts with the creation of more homes for sale, especially workforce housing. The Wisconsin Realtors Association defines workforce housing as rental units that are affordable for those making up to 60% of the area medium income, and owned units that are affordable for those making up to 120% of area medium income.
“Whether you’re in northern Wisconsin, southeastern Wisconsin, whether you’re in rural parts of the state or the urban areas, we have a shortage of workforce housing supply,” Tom Larson, WRA’s senior vice president of legal and public affairs, said. “It is a big issue regardless of where you’re at in the state.”
WRA is championing a number of proposals outlined in Gov. Tony Evers’ 2021-23 budget plan that specifically target workforce housing creation, said Larson. They include: Further incentivizing workforce-housing creation in tax increment financing districts; establishing a $50 million workforce housing grant program; increasing the funding for the Wisconsin Housing and Economic Development Authority’s housing tax credit program from $42 million to $100 million; and creating a first-time homebuyer’s tax credit.
Larson said the state Legislature is considering other proposals that also would tackle the workforce housing issue. They include creating a workforce housing tax credit program similar to the existing affordable housing tax credit program, and creating an older housing rehabilitation tax credit.