As the market grapples with challenges, including the scarcity of supply and demographic shifts, the outlook suggests that the Milwaukee housing market will likely continue favoring sellers in the near future, necessitating strategic interventions to achieve a more balanced and accessible real estate landscape. Here are the recent statistics and insights that provide an overview of the current state of the Milwaukee housing market.
Milwaukee Housing Market Report
In the Metropolitan Milwaukee housing market, November witnessed a marginal decrease of 0.8% in home sales compared to the previous year. While October marked a positive turn with the first sales increase in 18 months, November fell just 11 units short of maintaining that momentum, according to the Greater Milwaukee Association of REALTORS®. This subtle decline hints at the intricate dynamics shaping the local real estate landscape.
Market Indicators and Trends
Despite the dip in sales, listings experienced a consistent upward trend, increasing for the fourth consecutive month by 3.6% in the four-county area. However, the impact of higher interest rates, introduced mid-2022, is evident as new listings saw a notable decline of 12.8% compared to November 2021.
The scarcity of listings emerged as a significant factor contributing to the decrease in unit sales. Despite a robust demand, the market faced challenges due to insufficient available units. With an inventory of 2.8 months in November (considering 6 months as a balanced market), the situation intensified when listings with an offer were factored in, resulting in a rate as low as 1.4 months. This tight market favored sellers and led to a surge in prices.
Price Dynamics: Upward Trajectory
The median home prices in November experienced a notable increase of 9.7%, climbing from an average of $346,442 to $379,887. The scarcity of new construction and existing home listings played a pivotal role in driving prices higher. Factors such as only 1,364 new home construction permits issued in the four-county area through October, compared to 1,688 permits a year ago, underscore the pressing need for more construction units.
Additionally, the reluctance of current homeowners to move, fueled by low mortgage interest rates, further constrained the supply. To achieve a balanced market, an additional 4,425 units were required in November alone, emphasizing the existing systemic challenges in the housing market.
Challenges in the Milwaukee Housing Market
The primary challenge facing the Milwaukee housing market is the deficiency in new construction of single-family houses and condominiums. An over-reliance on apartments to meet demand, coupled with a surge in Millennial and GenZ buyers, exacerbates the historically tight market. The repercussions of this imbalance extend beyond the immediate market conditions, posing a threat to the aspirations of thousands of potential homeowners.
The impending danger is that without a substantial increase in supply, many individuals will be compelled to continue renting, missing out on the wealth-building opportunities and other benefits associated with homeownership. This predicament is fueled by the demographic surge and reasonable interest rates, further accentuating the need for a comprehensive solution to address the housing shortage.
Market Balance and Future Projections
Examining the seasonally adjusted inventory, November recorded 2.8 months of inventory, signaling a market favoring sellers. Considering listings with an “active offer,” the inventory level drops to 1.4 months, highlighting the intensity of the supply-demand imbalance. With 3,763 current listings providing 2.8 months of inventory, an additional 4,425 units are required to achieve a balanced market.
As the Milwaukee housing market grapples with these challenges, the question of whether it is a buyer’s or seller’s market remains pivotal. The persistent imbalance in supply and demand, coupled with the surge in prices, raises concerns about the accessibility of homeownership for aspiring individuals.
Is Milwaukee a Buyer’s or Seller’s Housing Market?
The Milwaukee housing market is currently favoring sellers. With an inventory of 2.8 months in November and a further reduction to 1.4 months when considering listings with an “active offer,” the market conditions heavily tilt in favor of those selling properties. This tight market dynamic puts sellers in a advantageous position, influencing pricing trends and limiting choices for potential buyers.
Are Home Prices Dropping in Milwaukee?
No, home prices in Milwaukee are not dropping; in fact, they are on an upward trajectory. November witnessed a significant increase of 9.7% in median home prices, with the average price rising from $346,442 to $379,887. This surge can be attributed to the persistent shortage of new construction and existing home listings, contributing to a competitive environment that favors sellers and puts upward pressure on prices.
Milwaukee-Area Housing Market Forecast 2024
The Milwaukee-Waukesha-West Allis housing market is marked by dynamic trends, with the average home value standing at $324,778, reflecting an impressive 8.5% increase over the past year, according to Zillow. Homes in this region typically go pending in approximately 24 days, underlining the brisk pace of real estate transactions as of November 30, 2023.
One-Year Market Forecast (November 30, 2023)
Looking ahead, Zillow’s one-year market forecast for Milwaukee indicates a modest decline, with a projected decrease of 0.8%. This forecast provides valuable insights for both buyers and sellers, shaping expectations in a market that continues to evolve.
Inventory and New Listings (November 30, 2023)
The available inventory for sale in Milwaukee on November 30, 2023, stands at 4,046, providing potential buyers with a range of options. During the same period, there were 1,347 new listings, reflecting ongoing activity in the market and contributing to the overall housing supply.
Key Metrics: Median Sale Price and List Price (October 31, 2023, and November 30, 2023)
As of October 31, 2023, the median sale to list ratio is 1.010, indicating a balanced relationship between the listed and sold prices. The median sale price for homes in this market was $282,333, while the median list price as of November 30, 2023, is $284,233.
Competitive Landscape: Sales Above and Below List Price (October 31, 2023)
The market dynamics on October 31, 2023, revealed that 56.5% of sales were conducted over the list price, demonstrating the competitive nature of the Milwaukee housing market. On the flip side, 32.8% of sales were under the list price, showcasing the diversity in pricing strategies among sellers.
Will the Milwaukee Housing Market Crash?
Zillow’s one-year market forecast does not indicate an imminent housing market crash for Milwaukee. While a slight decline of 0.8% is projected, it’s essential to interpret this forecast in the broader context of market dynamics. The continued demand, brisk transaction pace, and competitive pricing landscape suggest a resilient market that may experience adjustments rather than a significant downturn.
Buyers and sellers alike should stay informed about evolving trends, leverage available data, and consult with real estate professionals to navigate the Milwaukee housing market effectively. With a diverse range of listings, competitive pricing strategies, and a dynamic forecast, the market offers opportunities for those looking to engage in real estate transactions.
Milwaukee Real Estate Investment Overview
Milwaukee’s real estate market seems to be doing well, with steady growth in husing prices over the past year. The typical home value in Milwaukee-Waukesha-West Allis is $324,778, which represents an increase of 7.6% over the past year. 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.
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/
