April Home Sales Down 9.2%

May 12, 2020 – As expected, the Metropolitan Milwaukee real estate market hit the brakes in April due to efforts to control the coronavirus pandemic. While most of society was shut down in April, Governor Evers’ “Safer at Home” order qualified real estate as an “essential service.”

We are grateful for that designation, because, clearly, many families needed to move into a house in April.

REALTORS® responded to the governor’s order by creating safe environments for clients, successfully selling 1,596 homes last month.

While there were 1,757 sales a year earlier, the fact that sales occurred in the economic climate the region experienced in April, shows the resilience of the market and the level of demand among consumers.

The outlier in April was Washington County, which saw a 7.5% increase in sales. Sales in the other regional counties probably would have been higher were it not for closings having been spread out due to reducing the number of closings per day, thoroughly cleaning offices where closings occur, etc. to reduce the spread of coronavirus.

Many sellers wanted their REALTOR® to continue marketing their home safely, and buyers were actively viewing homes online and virtually. Brokers reported their web traffic had increased substantially in the weeks after the governor’s order.

The extension of the “Safer at Home” order beyond the initial April 24th deadline, to May 26th, will undoubtedly  have some ripple effect on the market and may cause buyers and sellers to pause their participation in the real estate market. Nonetheless, the overall health of the regional economy and real estate market as the pandemic hit SE Wisconsin should enable the market to withstand the current shock and resume functioning with minimal damage.

Average Sale Prices

The average sale price in the 4-county area was up 8.3%, going from $266,922 in April 2019 to $288,948 last month (+$22,026). For the year, average sale prices are up 10.7% to 276,608 from $249,852 in 2019.

Another measure of the market is the percent of the original list price a home sale receives. In April, the average sale price was 98.7% of list price, up 0.5% from April 2019. For the year, sales are 97.3% of list price, up 0.7% from the first four months of 2019.

Listings

Listings were down 33.8% in the metropolitan area, and down by 35.4% in Southeastern Wisconsin, in April.

An article in REALTOR® Magazine, citing the Weekly Housing Market Monitor reports, “about 77% of potential sellers are preparing to sell their homes once stay-at-home orders from the COVID-19 pandemic are lifted.”

A lack of listings has been the Achilles heel of the market for several years. Sellers’ currently holding off on listing their property has aggravated the situation and resulted in fewer “days on market” (DOM). DOM dropped from 39 days in April 2019 to 36 last month (-7.7%).

That dynamic explains why prices have been steadily increasing, and why buyers have had a hard time finding properties to choose from. The lack of new construction of single-family and condominium dwellings is a significant cause of the dearth of available listings.

Inventory

Seasonally adjusted inventory is calculated by taking the homes available for sale in each month and comparing them to the past 12 months’ average sales.  This tells us how many months it would take to sell the existing homes on the market.

The seasonally adjusted inventory level for April was 2.8 months, down from March’s 3.0 month level.  For comparison, the seasonally adjusted level was 3.5 months in April 2019.

Generally, six months of inventory is considered a “balanced” market. If inventory falls below six months, the market favors sellers; and when inventory exceeds six months, it is a buyer’s market. With 4,889 current listings providing 2.8 months of inventory, the market would need an additional 5,620 units available to push inventory to 6 months.

We can also calculate inventory by subtracting the listings that have an “active offer” from those available for sale in each month.  Approximately 8 in 10 listings that buyers place an offer on go on to a complete sale.  This gives us a different perspective of the quantity of homes available on the market.

Subtract the 2,099 listings with an active offer from current listings presents an effective inventory level of 1.4 months, down from March’s 1.5.  A year ago, the same calculation showed April’s inventory level at 1.6 months.

Where to go

Buyers should seek the counsel of a REALTOR® in determining their best housing options, and sellers need a REALTORS® expert advice in making correct marketing decisions with their homes.

The Greater Milwaukee Association of REALTORS® is a 5,000-member strong professional organization dedicated to providing information, services, and products to “help REALTORS® help their clients” buy and sell real estate.  Data for this report was collected by Metro MLS, Inc. a wholly owned subsidiary of the GMAR.

* Sales and Listing figures differ between the “Monthly Stats” and quarter (or year-end) numbers, because the collection of Monthly Stats ends on the 10th of each month, whereas quarters are a continuous tally to 12/31.  For example, if a sale occurred on July 29th, but an agent does not record the sale until August 11th, that sale would not be included in the July sales figures (or any subsequent month’s total) but would be added to the quarterly and annual total sales figures.

** All references to the “metropolitan” area denotes the 4 counties of Milwaukee, Waukesha, Ozaukee and Washington Counties. The “region” or “Southeast Wisconsin” refers to the 4 metropolitan counties (Milwaukee, Waukesha, Ozaukee, and Washington), plus the 3 counties to the south, Racine, Kenosha, and Walworth Counties.

NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. While it is believed to be reliable, Urban Milwaukee does not guarantee its accuracy or completeness.

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