Home sales in the metropolitan Milwaukee market were down 10.8 percent in December and down 1.4 percent for all of 2018, compared with the same time periods of the year prior, according to the Greater Milwaukee Association of Realtors.
The 1,242 homes sold in December totals 307 fewer than the same month in 2017. In a news release, GMAR said the drop is primarily attributed to a lack of homes for sale as well as increasing interest rates. Through the fourth quarter of 2018, 21,060 homes were sold in the four-county metro area, compared with the 21,357 units sold in the area in 2017.
GMAR officials noted 2018 was a strong year despite finishing behind 2017’s numbers. The four-county metro market of Milwaukee, Waukesha, Washington and Ozaukee counties have recorded sales of 21,000 units or more in each of the last three years. The only other year this has happened since 2000 was in 2005, when 21,642 homes were sold.
In December, homes under $300,000 accounted for 76 percent of units sold, 13 percent of sales were between $300,000 and $400,000, five percent were between $400,000 and $500,000, and six percent sold for more than $500,000. Seventy-three percent of homes were sold within 60 days, 13 percent took between 60 and 90 days, and six percent took 90-120 days.
Looking at what might be in store for 2019, GMAR said rising interest rates should be a constraint on the demand side of the market, with rates expected to rise to more than 5 percent during the year.
Demand will likely be lower this year as a result, since some prospective buyers will decide not to purchase a home due to rising interest rates. Therefore, price increases will probably be limited to the around 2-3 percent. Unit sales are expected to be lower than in 2018, somewhere around 20,000.
Listings were mixed in southeastern Wisconsin in December; the four-county area went up 54 units, a roughly six percent increase. Listings were nearly flat in Milwaukee County, up by at least 24 percent in both Waukesha and Washington counties, and down about 27 percent in Ozaukee County.
GMAR added there is no sign that the lack of listings under $300,000 will get any better, which will likely push prices for those properties even higher. This was a trend observed in 2018, where $300,000 listings were ultimately selling for $325,000 or $350,000 as the market tightened.
In order to have enough homes to reach what is considered a “balanced” market — 6 months’ worth of inventory — thousands of units would need to be added to the current supply in the area.
Several brokers are concerned that the run-up in apartment construction in recent years has taken resources away from single-family and condo development, further exacerbating the supply problem, noted GMAR.
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