January Home Sales Up 4.3%

Whitnall Avenue homes. Photo by Carl Baehr.

January 13, 2017 – Home sales in the Metropolitan Milwaukee housing market were up 4.3% in January. 973 homes sold in January compared to 933 in January 2016. Comparing the numbers to 2015, sales were up 18.7% (820 in ‘15).

2017 picked up right where 2016 left off, with solid sales and fewer listings than the previous month. January was the 9^th month of the last 12 in positive sales territory. The 973 sales in January were the highest for that month since 2005 (1,042 in ‘05).

Listings Decrease

On the listing side, the 1,684 listings were the fewest of any January in the 21^st century. Inventory is chronically low, taking after most of 2016, and somewhat worrisome as we head into the 2017 peak selling season.

There are two main reasons for the anemic level of listings in the market. One is that sellers are not feeling like their home has made up the value it lost during the recession. In other words, they are not feeling the “wealth effect” they had before the recession began in 2008.

A second reason for fewer listings is that there aren’t any homes for sellers to move into. An older suburban couple, for example, who wants to downsize to a condo in downtown Milwaukee, is hard pressed to find an available unit – delaying the sale of their current home. Additionally, new construction is not keeping up with demand for a variety of reasons.

Exceptionally “Tight” Inventory

As has been the case for some time, inventory was very tight for properties under $300,000. However, days on market have grown as the price point of a property increases.

The seasonally adjusted inventory level for January was 3.6 months, down from December’s 3.8 months. The seasonally adjusted level was 4.9 months in January 2016. Six months of inventory is generally regarded as a “balanced” market, in which sellers and buyers are evenly matched in price negotiations. If inventory goes below 6 months sellers often see higher prices from their REALTOR® recommended listing price, when the price of a property is bid up in offers and counter-offers.

Inventory (units left side)

Another way to look at inventory is by eliminating listings that have an active offer on them, because most listings with an active offer continue through to a complete sale.

Subtracting the 1,556 listings with an active offer from the 5,378 current listings, presents an effective inventory level of 2.2 months, down from December’s 2.3 month level. A year ago, the same calculation showed January’s inventory level at 3.2 months.

Market Outlook

With sales and listings going in opposite directions, the market is building up price pressure in the coming months. Average sale prices peaked in all 4 metropolitan counties in 2006 or 2007 and it appears that 2017 will see the aggregate average price in each county reach its pre-recession peak.  Hopefully, this will allow home owners to feel that they have recovered from the recession enough to sell their current home and find or build a new one.

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 home.

The Greater Milwaukee Association of REALTORS^® is a 4,000-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 “4th qtr” (or year-end) because the collection of “Monthly Stats” ends on the 10^th of each month; whereas the “4^th qtr” is a continuous tally to 12/31.  For example, if a sale occurred on July 29^th, but the agent does not record the sale until November 11^th, that sale would not be included in the July sales figures (or any subsequent month’s total) but would be added to the annual total sales figure in the “4^th qtr” total.

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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