Tight supply and strong demand for homes across the state pushed prices up almost 6 percent in July compared to July 2016, according to the latest data from the Wisconsin Realtors Association.
At the same time, sales have slipped, falling 5 percent compared to July 2016 and 7.5 percent compared to July 2015 due to a consistent lack of inventory.
[caption id="attachment_155554" align="alignright" width="433"] Limited inventory drove up prices in July.[/caption]
Median prices in July increased 5.9 percent year-over-year, to $180,000, the highest recorded July price since the Wisconsin Realtors Association changed the way it collects data in 2005. Home prices bottomed out in 2011 at $140,000 and have since steadily increased 28.5 percent.
“Tight supply and strong demand is a recipe for price pressure, and that’s exactly what we’re seeing in the state,” Michael Theo, WRA president and CEO, said in a written statement.
The median price, year-to-date, for a house in southeastern Wisconsin is $185,000, up 7.6 percent compared to 2016. In Milwaukee County, the median price is $150,000, up 6.7 percent from the same time last year.
Kenosha County has seen the largest increase in home prices, with the median price being $165,000, up 10.7 percent from last year.
Every county in the state has experienced house price increases this year, according to WRA.
The phenomenon is not unique to Wisconsin, with the National Association of Realtors also reporting the median price in the second quarter of 2017 was 6.2 percent higher than that same quarter in 2016.
“Remarkably, our housing continues to be affordable, but it’s been slipping,” Theo said.
The Wisconsin Housing Affordability Index shows the fraction of the median-priced home a qualified buyer with a 20 percent down payment and a 30-year fixed-rate mortgage can afford to buy, assuming the buyer earns the median family income in the state.
The index stood at 211 in July, which means a buyer can afford 211 percent of the median-priced home. By comparison, the index was at 225 in July 2016.
“Income has been growing over the last year, but not enough to offset the slight rise in mortgage rates and more substantial increase in prices,” Theo said, adding that he expects continued erosion in affordability over the next six to 12 months.