The residential real estate market continues to be solid in the Milwaukee metro area with home sales up 4.3 percent in January year-over-year.
January was the ninth month of the last year of year-over-year sales growth. With 973 homes sold, it was the most homes sold in the area during the month since January of 2005.
While this is good news for sellers, home buyers continue to find a difficult time finding properties as the number of listings are starting to drop, said Mike Ruzicka, president of the Greater Milwaukee Association of Realtors.
On the listing side, there were 1,684 homes listed for sale, the fewest of any January this decade. This is somewhat worrisome considering how low inventory was throughout 2016, Ruzicka said.
There are two main reasons for the anemic level of listings in the market: One is that sellers are not feeling like their home has made up the value it lost during the recession.
A second reason for fewer listings is that there aren’t any homes for sellers to move into.
“An older suburban couple, for example, who wants to downsize to a condo in downtown Milwaukee, is hard pressed to find an available unit – delaying the sale of their current home,” Ruzicka said. “Additionally, new construction is not keeping up with demand for a variety of reasons.”
The seasonally adjusted inventory level (the amount of time it takes to sell all of the homes on the market at a given time) for January was 3.6 months, down from December’s 3.8 months. The seasonally adjusted inventory level was 4.9 months in January 2016.
Six months of inventory is generally regarded as a “balanced” market, in which sellers and buyers are evenly matched in price negotiations.
With sales and listings going in opposite directions, the market could be building up price pressure in the coming months.
For example, Milwaukee County saw a 7.4 percent increase in home sales in January, and a 3 percent decrease in home listings. In Waukesha County there was a 0.4 percent increase in home sales and an 11.6 percent decrease in listings.
Average sale prices peaked in all four metropolitan counties in 2006 or 2007 and it appears that 2017 will see the aggregate average price in each county reach its pre-recession peak, Ruzicka said.
“Hopefully, this will allow home owners to feel that they have recovered from the recession enough to sell their current home and find or build a new one,” he said.
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