The Milwaukee housing market is undergoing significant shifts, with data provided by the Greater Milwaukee Association of REALTORS® shedding light on the trends and challenges facing the region. In this update, we delve into the recent statistics and insights that provide a comprehensive overview of the current state of the Milwaukee housing market.
Milwaukee Housing Market Update
Market Highlights
- Buyers Remain Active: Despite challenges, there is a consistent level of buyer interest in the market.
- Price Increases: Low housing inventory and strong demand have led to a notable price increase of 6.9%.
- Stagnant Cycle: The market is stuck in a frustrating cycle due to inadequate supply and high demand.
Analyzing the Market Dynamics
The July data reveals a 19.4% decrease in home sales compared to the previous year in the metropolitan Milwaukee area. However, this decline is not due to a lack of interest from buyers; in fact, buyer demand remains robust. The root of the problem lies in the scarcity of available housing units to meet this demand.
One major contributing factor is the shortage of new single-family houses and condominiums. The market is experiencing an overabundance of apartment construction, while options for detached homes are limited. Additionally, current homeowners with low mortgage interest rates may hesitate to sell their properties if they would have to take out a new mortgage at higher rates for a new property.
This situation has created a cycle where empty-nesters and elderly homeowners looking to downsize are unable to find suitable properties, preventing them from freeing up larger homes for young families who need more space. As a result, the market remains imbalanced and constrained.
Rising Prices and Inventory Challenges
The lack of available homes has driven up prices, with the average price increasing by 6.9% to $400,511 in July. The market's imbalance is further evident in new listings, which have fallen by 18.4% compared to the previous year.
To achieve a balanced market, characterized by a 6-month inventory, the four-county area would have needed an additional 4,900 housing units in July. Unfortunately, the available inventory was only sufficient to satisfy 2.6 months of buyer demand, dropping to 1.1 months when units with offers were excluded.
The Role of Construction and Demographics
The fundamental issue lies in the lack of new construction of single-family houses and condominiums. The focus on apartment construction has not addressed the growing demand for other housing options. This, combined with the influx of Millennial and GenZ buyers and favorable interest rates, has resulted in an exceptionally tight market.
The implications of this housing shortage are significant. Many potential homeowners are forced to continue renting, missing out on the opportunity to build equity and experience the benefits of homeownership. This scenario perpetuates a cycle of delayed homeownership and financial growth.
Navigating the Path Forward
Buyers and sellers in the Milwaukee housing market should seek guidance from experienced REALTORS® to make informed decisions. Whether determining the best housing options or making strategic marketing choices, REALTORS® provide valuable expertise.
The Greater Milwaukee Association of REALTORS® is a reputable organization comprising over 5,500 members dedicated to assisting both buyers and sellers in the real estate market. The data used for this report was collected by Metro MLS, Inc., a subsidiary of GMAR.
Understanding Inventory Levels
The seasonally adjusted inventory level for July was 2.6 months. After subtracting listings with active offers (which typically result in sales), there were 3,160 available listings, equivalent to only 1.1 months of inventory.
The Milwaukee housing market is grappling with a unique set of challenges driven by a lack of housing supply and robust demand. This has resulted in rising prices, limited inventory, and a cycle that impacts buyers and sellers alike. As the market evolves, it remains essential for stakeholders to collaborate and innovate to create more diverse housing options that cater to the needs of various demographics. Through strategic measures, the Milwaukee housing market can aspire to achieve a more balanced and equitable landscape.
Milwaukee-Area Housing Market Forecast 2023-2024
The Milwaukee housing market has been a subject of keen interest for both buyers and sellers. As we delve into the latest data and insights, we aim to provide a comprehensive overview of the current state of the market and offer a glimpse into its future trajectory.
Current Market Snapshot
According to Zillow's latest data, the average home value in the Milwaukee-Waukesha-West Allis area stands at $330,038, reflecting a notable increase of 4.3% over the past year. Additionally, homes in this area are garnering significant attention, with properties going pending in approximately 12 days on average (data up to July 31, 2023).
Short-Term Forecast
Zillow's 1-year market forecast, as of July 31, 2023, projects a growth of 4.0%. This indicates the market's resilience and the anticipation of continued appreciation in home values over the upcoming year.
Market Dynamics and Metrics
Some key metrics shed light on the recent market behavior:
- Median Sale-to-List Ratio: As of June 30, 2023, the median sale-to-list ratio stands at 1.031, reflecting the competitive nature of the market where properties are often sold above their listed prices.
- Percent of Sales Over List Price: In June 2023, a substantial 68.1% of sales were recorded over the list price, underlining the strong demand and potential bidding wars in the market.
- Percent of Sales Under List Price: Contrarily, 23.6% of sales in June 2023 were under the list price, highlighting some variations in pricing strategies.
- Median Days to Pending: The median time for a property to go pending was 12 days, as of July 31, 2023, illustrating the rapid pace at which homes are being snapped up by buyers.
Assessing Market Trends and Projections
Is the Milwaukee Housing Market Slowing Down?
While the market has shown remarkable growth in recent years, the marginal decline in the 1-year forecast from 4.3% to 4.0% could indicate a subtle slowing down of the market's rapid appreciation. However, it's important to note that this is a projection and actual market behavior may vary based on various factors.
Milwaukee: A Buyer's or Seller's Market?
The metrics presented suggest that the current Milwaukee housing market leans more towards a seller's market. The high median sale-to-list ratio, significant percentage of sales over the list price, and relatively short time for properties to go pending all point towards strong seller leverage. Buyers might encounter competition and potentially higher prices as they navigate this market.
Milwaukee Real Estate Investment Overview
Milwaukee's real estate market seems to be doing well, with steady growth in housing prices over the past year. The typical home value in Milwaukee-Waukesha-West Allis is $330,038, which represents an increase of 4.3% over the past year. Moreover, Zillow's one-year market forecast for Milwaukee-Waukesha-West Allis is 4.0%, indicating a stable and consistent growth rate in the housing market. However, it is important to note that the typical home value can vary depending on the neighborhood and housing type.
The Milwaukee real estate market seems to be a good option for affordable housing development, with Bear Real Estate Group receiving $20.6 million in financing for the construction of Michigan Street Commons, a 99-unit fully affordable housing development in Milwaukee.
Milwaukee's foreclosure rate is expected to be lower than ever before, accounting for less than 1% of all mortgages, less than half the average historical rate of 2.5%. However, the GDP growth rate is predicted to be 1.3%, indicating a significant slowdown. It is unclear how this will impact the real estate market in Milwaukee.
Real estate investment is active in Milwaukee, with Kyle Mack, owner of Mackximus LLC, a real estate investment company in Milwaukee, discussing his business in a video interview. Additionally, PIMCO, an investment management firm, manages assets for individual investors around the world.
Milwaukee is investing in its infrastructure, proposing to create the Vel R. Phillips Plaza, situated south of Wisconsin Avenue between North Fifth Street and North Vel R. Phillips Avenue. The city is prepared to move forward on the project which will add to the positive.
There seem to be various ways to invest in the Milwaukee real estate market, such as buying homes to renovate and resell, investing in real estate courses to gain knowledge about the industry, and investing in property management companies that help landlords maximize their investment properties in Milwaukee.
In terms of commercial real estate, Milwaukee's downtown office market has its strengths, highlighted by Fiserv's pending headquarters move from Brookfield to HUB640 by the end of 2023, and Northwestern. However, more Milwaukee office buildings may become apartments in the future.
Overall, Milwaukee's real estate market appears to be doing well, with steady growth in housing prices and various opportunities for investment in the residential and commercial sectors.
Top Reasons to Invest in Milwaukee Real Estate Market
Milwaukee is a city in Wisconsin that offers real estate investors a lot of opportunities. With a population of over 590,000 people, it is the largest city in the state and offers a diverse range of neighborhoods, property types, and investment opportunities. Here are some of the top reasons to consider investing in Milwaukee's real estate market:
- Affordability: Compared to other major metropolitan areas in the United States, Milwaukee offers relatively affordable real estate prices. This means that investors can find deals on both residential and commercial properties that are priced lower than similar properties in other cities.
- Strong rental demand: Milwaukee has a strong rental market, with a high percentage of residents who rent their homes. According to data from the U.S. Census Bureau, over 50% of Milwaukee's residents are renters. This creates a significant demand for rental properties, particularly in areas that are close to downtown, universities, or other major employers. As of March 2023, the average rent for a 1-bedroom apartment in Milwaukee, WI is currently $995. This is an 11% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Milwaukee remained flat. The average rent for a 1-bedroom apartment increased by 1% to $995, and the average rent for a 2-bedroom apartment increased by 9% to $1,085.
- Growing economy: Milwaukee has a diverse economy that is experiencing steady growth. The city is home to a range of industries, including manufacturing, healthcare, finance, and education. According to the Milwaukee Economic Development Corporation, the city has seen a 13.5% increase in employment since 2010, and the unemployment rate has dropped from 9.5% in 2010 to 3.5% in 2022. A growing economy typically translates to increased demand for real estate, both from businesses and from residents.
- Low vacancy rates: With strong demand for rental properties, it's not surprising that Milwaukee has a relatively low vacancy rate. According to data from RentCafe, the overall vacancy rate in Milwaukee was 5.5% in 2021, which is lower than the national average of 6.8%.
- Urban revitalization: Milwaukee's downtown and surrounding neighborhoods have undergone a significant revitalization in recent years, with new development projects and investments in public spaces. The city has also seen an increase in younger residents who are attracted to urban living. This has led to an increase in demand for properties in walkable neighborhoods that offer amenities like restaurants, bars, and shopping.
- Favorable landlord-tenant laws: Wisconsin has landlord-friendly laws that make it easier for property owners to manage their rental properties. For example, landlords can evict tenants for non-payment of rent with just a five-day notice, and there are no limits on the amount that landlords can charge for security deposits. This can make investing in rental properties less risky for investors.
- Availability of financing: Like many other cities, Milwaukee has a range of financing options available for real estate investors. Local banks and credit unions offer commercial real estate loans, and the city has a range of public-private partnerships that provide funding for development projects. Additionally, there are a variety of federal and state programs that offer to finance affordable housing projects and other real estate development initiatives.
Therefore, Milwaukee's real estate market offers several compelling reasons to invest. The city has a strong economy, affordable prices, a growing rental market, and a diverse population. These factors, combined with tax incentives and a robust infrastructure, make Milwaukee an attractive location for real estate investors. However, like any investment, there are risks involved, and investors should carefully consider their options before investing.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
Another market to go for diversifying your investments is the Dallas housing market. Dallas, TX is a great market because it has a strong economy and constant population growth and will make your pockets bigger. As rents go up smart investors should invest in Dallas.
Similarly, Houston is another great market for investing in real estate for your early retirement. Houston housing market is becoming a hotbed of buyer activity that could be beneficial for real estate investors; just ask the multitude of overseas investors who are choosing Houston as the city of choice to invest in for the foreseeable future.
Let us know which real estate markets you consider best for real estate investing! If you need expert investment advice, you may fill-up the form given here. One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.
Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References
- https://www.gmar.com/resources/research-statistics/2021-housing-statistics
- https://www.redfin.com/city/35759/WI/Milwaukee/housing-market
- https://www.zumper.com/rent-research/milwaukee-wi
- https://www.zillow.com/milwaukee-waukesha-west-allis-wi/home-values/
- https://www.realtor.com/realestateandhomes-search/Milwaukee_WI/overview
- https://www.neighborhoodscout.com/wi/milwaukee/real-estate
- https://www.multihousingnews.com/bear-real-estate-lands-21m-for-milwaukee-affordable-project/
- https://www.bizjournals.com/milwaukee/video/6082058683001
- https://www.expertise.com/wi/milwaukee/property-management
- https://www.milwaukeemag.com/milwaukee-mayor-proposes-investing-15-million-to-create-vel-r-philips-plaza/
- https://www.jsonline.com/story/money/real-estate/commercial/2023/03/09/more-milwaukee-office-buildings-will-likely-become-apartments/69963549007/
