Buying real estate in Milwaukee can be a worthy investment opportunity. If you are looking at investing in the Milwaukee real estate market as a potential investment opportunity, you must read till the end. Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment. Milwaukee is often written off as a rust belt city in decline. While it is an urban Midwest town that started to decline in the 1970s, it is seeing a kind of renaissance. Milwaukee metropolitan area is home to around 1,574,731 people.
Downtown is undergoing revitalization, and the city is starting to attract college students who moved there following jobs. The Milwaukee housing market is poised for steady price growth over the next twelve months. NeighborhoodScout's data show that during the latest twelve months, Milwaukee's appreciation rate, at 16.75%, has been lower than appreciation rates in most communities in the country. In the latest quarter, Milwaukee's appreciation rate has been 6.47%, which annualizes to a rate of 28.49%.
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Milwaukee Housing Market Trends 2022
Real estate market data for Milwaukee suggests that there's little hope the supply shortage is going to be solved this year. Homebuilding is modestly paced in Milwaukee, Ozaukee, Washington, and Waukesha counties, and focused largely on higher-end houses. The limited supply of houses in Milwaukee has pushed up prices, and that should continue in 2022. In the four-county Milwaukee metro area, there is barely enough inventory to meet the demand.
The market's fundamental issue is a lack of new development of single-family homes and condos, as well as an oversupply of apartments. This bottleneck, coupled with the demographic boom of Millennial and Generation Z buyers, historically low loan rates, and a rising economy, has resulted in an unusually tight market.
According to Realtor.com's data, in March 2022, the median list price of homes in Milwaukee County was $199.9K, trending up 8.1% year-over-year. The median listing price per square foot was $147. The median sale price was $230K. More buyers are seeking to purchase than there are available houses in the Milwaukee county region, which indicates that the market is a seller's market. In March, the county had a total sales to total listings ratio above 0.2 which tends to favor sellers. Homes in Milwaukee County, WI sold for 1.41% above the asking price on average in March.
- There are 19 cities in Milwaukee County.
- River Hills has a median listing price of $900K, making it the most expensive city.
- Milwaukee is the most affordable city, with a median listing price of $165K.
- There are 176 neighborhoods in Milwaukee City.
- Riverwest has a median listing price of $279.9K, making it the most expensive neighborhood.
- Franklin Heights is the most affordable neighborhood, with a median listing price of $49.9K.
As per the real estate company, Redfin, the Milwaukee housing market is somewhat competitive. In March 2022, Milwaukee home prices were up 7.8% compared to last year, selling for a median price of $170K. On average, homes in Milwaukee sell after 46 days on the market compared to 46 days last year. There were 643 homes sold in March this year, up from 574 last year.
- Some homes get multiple offers.
- The average homes sell for about 1% above the list price and go pending in around 47 days.
- Hot listings can sell for about 7% above the list price and go pending in around 32 days.
- The most walkable neighborhoods in Milwaukee are Juneau Town, Lower East Side, and Yankee Hill.
Greater Milwaukee Housing Market Report – March 2022
In March 2022, there was only enough inventory to satisfy 1.9 months of demand, and if we subtract units with an offer, it dropped to 0.7 months (about 3 weeks), according to the data released by the Greater Milwaukee Association of REALTORS®. To satisfy the demand REALTORS® are seeing this spring, the market needs an additional 7,970 units. That is the quantity required to meet present demand, implying that the sellers' market will persist for the foreseeable future.
According to the association, the remainder of the 2022 market is expected to grow at a very healthy rate, but slightly slower than in 2021. Brokers anticipate a brisk spring market, with some listings continuing to receive multiple offers, but not as intense as in 2021.
Home sales in the Metropolitan Milwaukee real estate market increased by 2% in the first quarter of 2022, following a strong March. The first quarter of 2021 saw an increase of 80 units over the same period in 2021, which marked the start of a historic year. Simultaneously, the four-county market saw a 12.1 percent decline in listings in March and a 0.4 percent decline in the first quarter.
The Metropolitan Milwaukee real estate market outperformed the pandemic-fueled 2021 market. Washington County outperformed the other three metropolitan counties in March and posted an increase of 13.4% in sales. Milwaukee County also posted a positive growth of 8% as compared to 2021. Ozaukee and Waukesha counties recorded a decline in sales growth in March.
When demand exceeds supply, prices increase. And prices increased by 9.5 percent in the four-county area and 10.8 percent in the seven-county region of Southeastern Wisconsin during the first quarter. While a lack of available listings for buyers and depressed new construction numbers have been persistent headwinds in recent years, there are new forces at work in the macroeconomy that may have an effect on the housing market in this region.
Milwaukee-Area Real Estate Market Forecast 2022
What are the Milwaukee real estate market predictions for 2021 & 2022? Let us look at the price trends recorded by Zillow over the past few years. Since the last decade (May 2012), the typical home value in Milwaukee-Waukesha-West Allis Metro has appreciated by around 79.2% (Zillow Home Value Index). Greater Milwaukee home values have gone up 11.7 percent over the past year alone. The typical value of homes in Milwaukee-Waukesha-West Allis Metro is currently $261,710.
It indicates that 50 percent of all housing stock in the area is worth more than $261,710 and 50 percent is worth less (adjusting for seasonal fluctuations). ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The supply is exceeding the demand, giving purchasers an advantage over sellers in price negotiations. In other words, there are more homes for sale than there are buyers in the marketplace. Baltimore is a seller's real estate market.
- The typical home value of homes in Milwaukee-Waukesha-West Allis Metro is $261,710, and they will continue to rise over the next twelve months.
- Home Prices have already risen by 9.5% in the 4 county area during the 1st quarter of this year.
- Home Prices have also gone up 10.8% in the 7 counties of Southeastern Wisconsin.
- The typical value of homes in Milwaukee County is $202,749, up 13% over the past year.
- Prices in Milwaukee will continue to rise over the next twelve months.
- Waukesha County home values (current = $375,284) have gone up 11.3% over the past year and will continue to rise over the next twelve months.
- Washington County home values (current = $324,666) have gone up 12.5% over the past year and will continue to rise over the next twelve months.
- Ozaukee County home values (current = $379,301) have gone up 14.1% over the past year and will continue to rise over the next twelve months.
Here is the Milwaukee-area real estate price appreciation graph by Zillow since the last decade.
Milwaukee Real Estate Investment Overview
Is it worth buying a house in Milwaukee, WI? Investing in real estate is touted as a great way to become wealthy. Many real estate investors have asked themselves if buying a property in Milwaukee is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Milwaukee housing market forecast 2022 for answers on why to put resources into this market.
As per the real estate company called Neigborhoodscout.com, single-family detached homes are the single most common housing type in Milwaukee, accounting for 39.81% of the city's housing units. Small (one, two, or no bedroom) single-family detached homes are the most common type of housing units in Milwaukee. Milwaukee has a mixture of owner-occupied and renter-occupied housing. Other types of housing that are prevalent in Milwaukee include duplexes, large and small apartment complexes, and a few row houses.
Let’s take a look at the number of positive things going on in the Milwaukee real estate market which can help investors who are keen to buy an investment property in this city.
Real Estate is Affordable
Milwaukee area homes have a typical home value of $261,710 (ZHVI). Homes are even cheaper in Milwaukee County, where a typical home costs around $202,749. A large share of the Milwaukee real estate market consists of starter homes and small single-family properties perfect for renting out. And you can buy several of these properties with the profits from one condo in a hot California market. Luxury markets like the Upper East Side of Milwaukee have a median price of less than $500K, a price well below the price tag for a mid-market home in hot real estate markets.
Upper East Side is a popular neighborhood for homebuyers who can afford to buy a home at the typical price of $462,063 (ZHVI). In 2021, 53226 Zip Code in Milwaukee, WI was ranked among the Top 50 Hottest Zip Codes in the nation. The majority of zip codes on their list were substantially lower in price than the national median.
As of now, homes for sale in 53226 have a median listing home price of $345,000. Homes for sale spend an average of 44 days on the market. Some of the hottest neighborhoods near 53226 are Cooper Park, Cannon Park, Mount Mary, Greenfield Gardens, and Honey Creek Parkway.
Milwaukee is also the seventh most affordable metropolitan market for homebuyers according to the American Enterprise Institute. According to Move.org, it has the 22nd best “cost of living” out of the United States’ top 75 cities, accounting for monthly expenses like rent, utilities, food, and gas. While Milwaukee offers a competitive cost of living, community organizers say progress still needs to be made in overall affordability, especially for lower-income populations. About 41% of housing units in Milwaukee fall in the price range of $133,000 – $266,000.
A Large Renter’s Market
Milwaukee real estate and rents are both relatively affordable, but what matters most is how much locals can afford. It is their incomes relative to rental rates and property prices that determine whether or not they can buy a home. Wisconsin came in third on a 2017 housing affordability report. Home prices are going up relative to incomes, and that’s forcing many renters to remain renters and newcomers to the area to rent instead of buy.
Apartments Are Expensive. While Milwaukee rental rates are below the national average, they’re certainly high. You’d have to pay several hundred dollars more for an apartment that is comfortable for a growing family and for that much money, renting a house is a viable alternative to renting a larger apartment. The limited supply of apartments relative to demand means many end up renting houses instead. That will keep the Milwaukee real estate market strong since there are no signs of a potential apartment or condo glut that would gut rental rates.
A piece (published in 2021) from Bloomberg Opinion comparing the average cost of rent with median area wages found that Milwaukee ranked in fifth place out of 15 large metropolitan areas for affordability. The data analyzed the average rent for a two-bedroom apartment in April 2021 from ApartmentList.com and compared it to the May 2020 median income reported by the Bureau of Labor Statistics.
In Milwaukee, those figures came to around $1,038 per month for rent and an average hourly wage of $20.86, implying an estimated 49.8 hours of work per month to cover rent. Milwaukee was the most affordable city, beating out Detroit, Columbus, and Indianapolis, and was preceded by Cincinnati, Louisville, and Pittsburgh. Cleveland was the most affordable city, with an average apartment costing $925 and only 45 work hours required to cover rent.
As of May 2, 2021, the average rent for a 1-bedroom apartment in Milwaukee, WI is currently $895. This is flat as 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 remained flat, and the average rent for a 2-bedroom apartment remained flat.
- The average rent for a 2-bedroom apartment in Milwaukee, WI is currently $1,095, a 5% decrease compared to the previous year.
- The average rent for a 3-bedroom apartment in Milwaukee, WI is currently $1,375, an 8% increase compared to the previous year.
- The average rent for a 4-bedroom apartment in Milwaukee, WI is currently $1,650, an 18% increase compared to the previous year.
Constrained Supply Keeps Property Values Strong
Milwaukee’s real estate market is seeing home values go up due to limited supply. The issue is particularly acute for properties costing less than $300,000. This means that many families that want to live in a house will have to rent because they struggle to find homes to buy. The supply isn’t helped by the modest pace of home construction because most properties being built cost over $300,000. Another factor is the labor market itself. There is a scarcity of skilled labor to build new homes at the rate they’re needed. Yes, the Milwaukee real estate market is seeing homes built, but as we already said, most of the available talent is building luxury homes – not affordable ones.
Strong Demographics
Milwaukee, as is true for the rest of Wisconsin, has plentiful jobs and a strong economy. This attracts new residents from across the region while preventing young natives from leaving in search of work. Many Baby Boomers are choosing to remain in their homes, too, preventing those homes from becoming available to the next generation and keeping prices high. This is why first-time homebuyers are driving up home prices in 2021. The Milwaukee housing market is only going to see demand for homes grow as many Millenials continue to find work in the Trump years and try to start their own families. The area is attracting young adults, too, with 80% of those moving to the area saying it is because they came for a job.
Good ROI Overall
The median rent for Milwaukee hovers around $1,100 a month or $13,000 a year. On a $130,000 property, this is a roughly 10% ROI. Rental real estate has an ROI of around 10% per year, half of which you see in appreciation, half of which is in returns. Expect to spend around 40% of the cost of the property to insure and maintain it. That would be $440. Subtract out the mortgage payments if you didn’t pay cash. If someone has a $600 mortgage, that would be a break-even point.
Note that the $1100 rent is an average for everything from two-bedroom apartments to five-bedroom single-family homes. A more realistic rent for a single-family home is $1,600-$2,000 per month. This would with a large down payment on the property to keep the mortgage down yield several hundred dollars a month of profit per property.
The elimination of Wisconsin’s state property tax will improve the return on investment for property owners. This was the first time the state had no property tax since 1931. Taxes on the median home were nearly $3000 in 2017. If taxes come down, then investors in the Milwaukee real estate market will keep more money without any extra effort.
Milwaukee rents have increased 0.9% over the past month, and have increased sharply by 8.4% in comparison to the same time last year. Currently, median rents in Milwaukee stand at $829 for a one-bedroom apartment and $1,018 for a two-bedroom. The city's rents have been increasing for 14 straight months – the last time rents declined was in February of last year. Milwaukee's year-over-year rent growth lags the state average of 10.0%, as well as the national average of 16.3% (source: Apartmentlist).
Some of the popular neighborhoods in Milwaukee, Wisconsin are Golden Valley, Mount Mary, Historic Third Ward, Bay View, Cooper Park, Bluemound Heights, Upper East Side, Riverwest, Enderis Park, Downtown Milwaukee, Washington Heights, Lower East Side.
Here are the 10 best neighborhoods in Milwaukee to invest in real estate because they have the highest appreciation rates since 2000 (List by Neigborhoodscout.com).
- Kilbourn Town
- Clock Tower Acres
- W Highland Ave / N 23rd St
- Marquette
- Riverwest
- Riverwest North
- E Chambers St / N Bremen St
- Gordon Park
- Brewers Hill North
- Harambee Southeast
Summary
Maybe you have done a bit of real estate investing in Milwaukee, WI but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. A good cash flow means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt.
Therefore, finding a good Milwaukee real estate investment opportunity would be key to your success. If you invest wisely in Milwaukee real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it is very important to read good books on real estate. The less expensive the Milwaukee investment property is, the lower your ongoing expenses will be.
When looking for the best real estate investments in Milwaukee, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
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
Housing Market Data, Trends & Statistics
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
Property tax repeal
https://www.jsonline.com/story/news/politics/2017/12/18/wisconsin-gov-scott-walker-touts-elimination-state-property-tax/961323001/
Median prices
https://www.realtor.com/local/Milwaukee_WI
Constrained inventory
https://www.jsonline.com/story/money/business/2018/01/24/big-demand-limited-supply-more-buyers-milwaukee-metro-housing-market/1046416001/
Milwaukee demographics
http://worldpopulationreview.com/us-cities/milwaukee-population
