The number of homes sold and the number of groundbreakings for new home construction in southeastern Wisconsin were down in 2014, compared to 2013.
But the region’s housing market is expected to bounce back in a big way in 2015.
The prices of homes sold in the region rose in 2014 and are projected to rise even higher. ClearCapital.com Inc., a Truckee, Calif.-based provider of data and solutions for real estate asset valuation and collateral risk assessment, predicts that the metro Milwaukee area will lead the nation with a 4.9 percent increase in home sale prices in 2015 (the highest projected increase of the nation’s 50 largest metro areas). ClearCapital.com predicts that prices for the national housing market will rise 1.2 percent, while prices in the Midwest will rise 2.8 percent. The Midwest will be the leading region for housing value appreciation this year, ClearCapital.com predicts.
The average price of a home that sold in the eight county southeastern Wisconsin region in 2014 was $193,910, up from $185,151 in 2013, according to data from the Greater Milwaukee Association of Realtors. That was the third consecutive year of home sale price increases for the region.
“We are starting to see a gradual edging up of prices,” said Kevin Donnell, president and chief operating officer of First Weber Group.
In addition, residential real estate executives say that Realtors are reporting brisk activity in the region’s housing market since 2015 began. Showing and inquiry activity has picked up dramatically since the holidays, so the market could take off this spring when sales sparked by recent showings close, Donnell said.
“Activity is very strong, in stark contrast to the beginning of the year last year,” he said. “The feeling I’m getting from people is they are really excited about how busy everybody is.”
“We are definitely seeing a picking up of activity of buyers being out there,” said John Horning, executive vice president of Brookfield-based Shorewest Realtors.
The number of homes sold in the four county metro Milwaukee area in 2014 was 17,749, down 2.5 percent from 2013, according to data from the GMAR.
Housing starts in southeastern Wisconsin also dipped in 2014, a decrease of 2.8 percent to 1,243, according to Menasha-based MTD Marketing Services LLC.
Still, 2014 was a good year for the region’s housing market because it was the first “normal” year for the market in the long time, said GMAR president Mike Ruzicka.
“Brokers reported a different kind of market early on in 2014,” he said. “They were delighted by the market’s change from one filled largely with distressed properties (short sales and foreclosures) in 2013 and the years prior to a more ‘traditional’ market, characterized by first-time buyers; move-up buyers with children looking for a larger home; and empty-nesters moving into a new home or condo.”
Foreclosures and short sales are “down significantly from where they were (a few years ago),” Donnell said. “That had a significant negative impact on pricing.”
The region’s housing market got off to a bad start in 2014 in part because of the brutally cold winter that kept buyers indoors, Donnell said. Home sales picked up later in the year with four consecutive months of increased home sales in the metro area to close the year. Home sales in the four county metro area were up 6.6 percent in December, according to GMAR.
Interest rates remain low and improvements in the regional and national economy are giving buyers more confidence to get off the sidelines and get into the housing market.
Young buyers, many reluctant to buy homes in recent years, are increasingly entering the market, Horning said.
“We’re starting to see millennials get into the market a little more,” he said. “Rents are increasing. With interest rates low, now is a good time to buy if you are going to be in the area for a few years.”
The lending market is also improving for homebuyers, which is providing a major boost to the housing market, Horning said.
“We’re seeing some positive news out of the lending community with the return of 3 percent down,” he said. “Fannie (Mae) and Freddie (Mac) have said they will be offering a 3 percent down program. We are seeing some excitement about that.”
“(The lending market for homebuyers) is a lot better,” Ruzicka said. “Much better than it was two years ago and better than it was last year. The feds are letting up on the local lenders. But buyers still have to provide a ton of information to the banks.”
The hottest local markets in the region, characterized by communities that had an increase in units sold, average sale price and a decrease in days on the market in 2014 were: Fox Point, Fredonia, Menomonee Falls, Pewaukee, Greenfield, Oak Creek, New Berlin, Franklin, Kewaskum and Cedarburg, according to the GMAR.
“There were more positives than negatives in 2014 and it appears that 2015 will continue on the same track,” Ruzicka said.
He predicts the number of homes sold in the metro area will increase 6 to 8 percent this year and the prices of homes sold in the area will rise about 2.5 to 4 percent.
“We think it’s going to be a lot like the mid to later part of 2014,” Ruzicka said.
While the region’s single family home market could catch fire this year, the apartment market is already red hot. Several apartment developments are under construction or are planned in downtown Milwaukee and in the suburbs.
