The average sale price for homes sold this year in southeastern Wisconsin is on the rise, but the number of homes sold has been down on a year-over-year basis ever since the winter’s polar vortex put a deep freeze on the market.
But Realtors are optimistic that sales activity will pick up this summer as the weather continues to heat up.
For the first five months of the year, home sales in the eight-county southeastern Wisconsin region were down 9.2 percent year-over-year to 8,732.
In May, home sales in the region were down 9.9 percent and sales in the entire state were down 6.9 percent compared with May of 2013. May was the fifth consecutive month of year-over-year home sales declines in the state
“We expected a slight bounce in May sales as the prolonged winter ended,” said Steve Lane, chairman of the Wisconsin Realtors Association board of directors. “But we haven’t seen that bounce yet.”
“The first quarter was definitely affected by the weather,” said John Horning, executive vice president of Brookfield-based Shorewest Realtors. “People didn’t want to walk around looking at houses in the bitter cold.”
However, even after the weather finally warmed up in spring, “(the market) continued to be a little sluggish later than anticipated,” Horning said.
Nevertheless, most Milwaukee area realtor associates are not worried about the sales decline during the first half of the year, said Greater Milwaukee Association of Realtors president Mike Ruzicka
“Despite a slower market, the GMAR is not hearing any concern from area brokers,” he said. “They are very confident that, while a little slower than last year, the market is on solid economic ground with unemployment at 6.1 percent and agents staying very busy helping sellers and prospective buyers. We are receiving several reports of multiple offers on properties.”
There are signs that the region’s housing market is poised for an uptick during the second half of the year. Shorewest and First Weber Realtors have seen an increase in pending business (written offers that haven’t closed yet) in the past two months.
“We’ve seen a 12 percent increase (in pending business) in June so far,” Horning said. “That’s a very positive sign. We’re seeing multiple offers. Occasionally we’re seeing escalation clauses, which we haven’t seen for quite a while. Those are all positive signs. That’s boding well for the second half of the year.”
May and June pending sales are “way ahead of last May and June,” said Kevin Donnell, president and chief operating officer of First Weber Realtors. “The last two months have been very good. Activity level is strong. I think we could be looking at a strong summer.”
Despite the lower sales numbers during the first half of the year, average home sale prices in the region are on the rise this year. The median prices of homes sold in the region were up 3.6 percent during the first five months of the year to $145,000. The biggest increases have been in Kenosha County, up 15.6 percent to $122,000, and in Racine County, up 14.5 percent to $115,000.
The rise is in average sale price is a result of more sales for higher priced homes, Donnell said. That is a good sign for sellers, but it doesn’t necessarily mean that specific homes have experienced price appreciation.
“We have more of the higher priced homes that are selling than we’ve seen in years past,” Donnell said. “The prices on individual homes have started to move up, too.”
But homes priced below $250,000, especially in hot areas like Wauwatosa and the East Side of Milwaukee, are the fastest to sell, Horning said.
“That’s where you are seeing homes sell before we even have them in the computer,” he said.
The brutally cold winter hurt demand from buyers, but also reduced supply as sellers held off on listing their homes for sale, Donnell said. This spring, buyers had a limited supply to choose from, which has also slowed sales. However, listings are increasing in recent months, he said.
Listings placed on the market in the metro Milwaukee area increased by 2.6 percent in May, the fourth-straight month of growth, according to the GMAR. The inventory level (the time it would take to sell all of the homes on the market at a given time) for May was 8 months, slightly above April’s 7.5-month level. That level represents a balanced housing market between buyers and sellers.
“Both new listings and inventory levels were up slightly in May, which should keep our housing affordability relatively high,” said Michael Theo, WRA president and CEO. “With median home prices up in 27 of the last 28 months, buying a home continues to be a good way to accumulate wealth and it’s a physical asset that should keep pace with inflation over the long term.”
