Appraising Our Future

Affordability Crisis?

Recent market forecasts indicate a notable uptick in home foreclosures alongside a contrasting trend of declining prices, particularly evident in certain regions across the country. Nationally, there has been a significant increase in the number of homes actively for sale, with unsold inventory rising by 8.85% compared to the previous year, contributing to a 14.8% growth in seller activity. Coinciding with this increase in supply, median home prices have only shown a marginal increase of 0.3% compared to February 2023. Real estate analysts speculate that this uptick in supply coupled with slower growth in median list prices may signify a shifting market dynamic.

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In Wisconsin, we have also seen a slight rise in new home listings, resulting in a 3.1% increase in new home sales compared to February 2023. Waukesha County experienced a noteworthy 10.8% increase in overall pricing between February 2023 and 2024, with a year-over-year growth of 6.2%. However, this growth was accompanied by a significant increase in marketing time, rising by 31.9% from an average of 69 to 91 days. Conversely, Milwaukee County saw a 9.9% increase in pricing between February 2024 and the same month of the previous year, with a slight decrease in marketing time by 3%, resulting in a medium days-on-market of 64 days compared to 66 days in February 2023. – according to the most recent housing data provided by the WRA.

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The current dynamics in the housing market underscore the fundamental principle of supply and demand. While there has been a modest increase in supply, it remains insufficient to meet demand adequately. Many homeowners who recently refinanced or purchased their homes benefited from historically low interest rates, leading to a surge in home values. Consequently, individuals considering selling their properties face the challenge of finding economically feasible alternatives in a market with elevated prices. Additionally, the scarcity of foreclosures further constrains demand, as homeowners facing financial difficulties often have equity in their homes, enabling them to explore refinancing options or sell their homes to capitalize on the appreciating market and alleviate financial burdens.

In 2010, the United States experienced its highest foreclosure rate on record, reaching 2.23%, which equated to 2.9 million foreclosures. In comparison, Wisconsin witnessed approximately 14% of foreclosures, translating to 6,095 homes, according to the Milwaukee Journal Sentinel. The Wisconsin Realtor's Association reported the lowest median home price in a February was at $112,600 in the year 2012. Contrastingly, February 2024 saw a statewide median price surge to $275,000, highlighting substantial appreciation over the intervening years.

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In the current market landscape, Waukesha County demonstrates only two listings classified as foreclosures or short sales. ?During my visits to Brookfield this week, I observed sales over the past month consistently closing at prices $20,000 to $25,000 above the asking price. ?However, my recent focus has shifted to Milwaukee County, specifically its suburbs, as the offers I've been reviewing suggest that the affordability challenge persists. My appointments to three different properties in Wauwatosa this past week revealed a similar trend, with all purchases attracting offers well exceeding the asking price and often competing against multiple bids. These observations underscore the ongoing affordability concerns within Milwaukee County's suburban real estate market.

Regarding distressed listings, Milwaukee County currently has 16 such properties listed on the multiple listings service, with three located outside the City of Milwaukee (one in West Allis and two in Brown Deer, both of which have received offers). The median list price for these distressed properties stands at $189.9K, with a median list price per square foot of $144. Comparatively, there are a total of 47 listings in Brown Deer and West Allis combined, 35 of which have received offers, boasting a higher median list price of $249.9K and a median list price per square foot of $177.

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In 2023, Milwaukee County witnessed 12 sales classified as foreclosures or short sales, excluding the City of Milwaukee, contributing to a total of 174 such sales statewide. According to ATTOM Data Solutions, lenders initiated the foreclosure process on 270,222 homes in 2023, nationally, reflecting a 9% increase from the previous year. Notably, Wisconsin appears to demonstrate a relatively higher level of fiscal responsibility in comparison to national trends.

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Diving Further into the Analytics.?

The information below can help sellers and real estate professionals understand local market conditions better, guiding pricing and listing strategies to align with current market expectations in different municipalities. Data is comprised of sales past 30 days.

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Fast Selling with High Prices: Bayside and Greendale are notable for having the shortest median days on market (3 days) with high median sold prices ($530,000 and $370,000, respectively), indicating strong demand and a competitive market in these areas. Bayside, in particular, stands out for balancing a quick sell time with a very high median sold price.

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Efficient Markets Across Price Ranges: West Milwaukee, despite a median sold price on the lower end ($183,200), shares the shortest median marketing time with Bayside and Greendale. This suggests an efficient market, possibly driven by affordability and demand.

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Premium Areas: Whitefish Bay and Fox Point have longer median days on market (4 and 13 days, respectively) but feature among the highest median sold prices ($638,877.42 and $657,450), pointing to their status as premium markets. The longer days on market could reflect a smaller pool of buyers at these price points.

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Market Variation: The variation in days on market and sold prices across municipalities reflects diverse market dynamics. For instance, Shorewood shows a significantly longer median days on market (23 days) but still maintains a high median sold price ($555,000), indicating a premium market where buyers may take longer to commit.

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Affordable vs. Premium Markets: Municipalities like Oak Creek and Brown Deer offer a middle ground, with median days on market at 7 and 9.5 days and median sold prices at $380,000 and $362,500, respectively, showcasing markets that balance affordability with desirable property features.

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Medium List Price By Municipality

Medium Asking Price per Sq Ft by Municipality

The bar graph above illustrates the median asking price per square foot by municipality, showing how this value varies across different areas. This visualization helps to compare the cost-effectiveness or premium of living spaces in each municipality based on the price per square foot.

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This graph provides insights into the average time homes spend on the market before being sold across different municipalities.?

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The analysis above highlights the complexity of the Milwaukee County real estate markets, where factors such as location, price point, and housing inventory influence how quickly properties sell and at what price. Communities with short selling times and high prices often indicate high demand and competitive bidding, while longer selling times in high-priced areas might reflect a narrower buyer pool or pricing strategies aimed at maximizing seller returns. Understanding these dynamics can be crucial for buyers and sellers to navigate the market effectively.

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If you are an agent, loan officer or homeowner with questions on the appraisal process, please feel free to contact the offices of Asap Appraisals, LLC at 262-442-2323, email us at [email protected] or visit our website at wiasapappraisals.com.

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