Buyers and sellers are asking these questions. Has the Wisconsin real estate market hit bottom yet? No one can answer this question with complete certainty. So – how do we decide if it is the right time to buy or sell?
Let’s look at some things we do know that might help us decide:
- We know Wisconsin home prices have dropped steadily and significantly over a long period of time. As an example, the average sales price of homes in Milwaukee County sold in the first and second quarters of 2011 has dropped to $128,075. (compared with $176,400 in the third quarter of 2010 and $148,400 in the fourth quarter of 2010. Source Metro MLS)
- We know interest rates are low – very low. As of mid July, the 30 year fixed rate mortgage is approximately 4.5%. The fixed rate 15 year mortgage is approximately 3.75%.
- We know that there are a lot of short sales and foreclosures on the market. Current sales of distressed properties number approximately 40% of the homes being sold.
- We know a lot of people waited to sell, thinking the Wisconsin real estate market would turn. It didn’t. We know a lot of people and still waiting for the market to turn.
- We know the inventory of homes for sale is high in most Wisconsin real estate markets. A balanced market generally has an inventory of six months of homes for sale. Most communities in Wisconsin now have an inventory in excess of ten months of homes for sale.
- We know that our economy is bad. Some even fear a double dip recession may occur.
- We know that our politicians are at odds with each other and that the probability of them agreeing on a bipartisan, effective long-term solution for our economy is unlikely.
- We know that the job market is worrisome, although Wisconsin’s numbers are better than the national average and employment gains have been posted in July.
What Wisconsin homebuyers should consider:
- The Homebuyer’s Affordability Index is at an historic high. This index details the ability of people to purchase an average priced home.
- Interest rates are at almost historic lows.
- The absorption rate of homes for sale is well above 6 months, indicating a buyer’s market.
- Distressed sales, along with other factors, have brought prices down.
The conclusion for Wisconsin homebuyers:
The above factors contribute to a buyer’s market which may be the best buyer’s market we’ll ever see.
What Wisconsin home sellers should consider:
- It’s certain the housing recovery will take a long time. Some predict steady price increases won’t occur for five years. How long do you want to wait to sell?
- More distressed properties are certain to come into the market. This could diminish prices even further.
- Many sellers have been waiting for the recovery to sell in order to recoup lost equity. It hasn’t happened and won’t happen quickly. Some of these sellers will put their home on the market in the near future. This increase in inventory will also likely diminish prices.
- What would happen to prices if a double dip recession does occur?
- And, don’t forget that the combination of the buyer’s affordability index as it combines with low interest rates is creating a favorable buyer for this market. Smart buyers are out looking to buy.
The conclusion for sellers:
The above factors contribute to a market for sellers which may be the best we’ll see for a long time.
To sum up:
Even though it seems to be a contradiction to say it’s a great time to buy at the same time we say it’s the right time to sell, the facts strongly suggest both statements are true. These are strange times so maybe we shouldn’t be surprised that such an apparent contradiction could be true. After consideration of the facts, most experts agree:
It IS a great time to buy and it IS the right time to sell.
Written by Mike Fons, General Sales Manager of First Weber’s Metro West real estate office in Brookfield.
Thank you for reading the First Weber Wisconsin real estate & Wisconsin living blog for information on the housing market in Wisconsin. To view Wisconsin real estate for sale, please see firstweber.com.