Dwindling Inventory Is Either a Blessing or a Curse, Depending on Your Role
2020 was a banner year for Wisconsin real estate, as home sales across the state reached record highs. Extremely low-interest rates bolstered demand, driving the numbers of available homes down and exploding markets statewide. While local sellers and agents alike benefit from low inventory and the resulting boon in home prices, buyers could face an increasingly aggressive market moving forward.
Dwindling Home Inventory in Wisconsin
Wisconsin’s housing market is nothing short of red hot. Exploding demand has resulted in rapidly rising prices with the average home value increasing 8.8% statewide over the past year and a whopping 13.1% in the desirable Milwaukee metro area. Prices have not meaningfully deterred buyers, though, as a record number of home sales was set at 9,671 in October 2020.
Record sales numbers have extrapolated falling inventory, particularly for properties under $300,000. In fact, inventory was down 53.0% and days on market were down 15.0% in January 2021. In October 2020, the statewide months' supply, or the number of months it would take to sell the current inventory of homes, had dropped a dizzying 31.0% year-over-year from 4.8 to 3.3 months. Six months supply typically denotes a healthy and balanced market, so, amid this increased demand and severely limited supply, agents and sellers alike have brokered some seriously profitable sales but buyers are facing an uphill battle.
How Wisconsin’s Falling Inventory Could Spell Trouble
Home inventory across Wisconsin was limited even before the global COVID-19 pandemic. Urban areas have proved particularly expensive, and hopeful buyers leaving big cities place increased strain on surrounding suburban and rural neighborhoods. Continually rising demand and prices across the state do little to help as potential buyers face fewer and fewer affordable home options.
Proposed remedies include affordable housing initiatives, incentivizing construction projects, and bridge housing. Innovative programs, increased efficiency, and fee waivers are other well-documented tactics that could help. Advocating for equality, affordability, and substantial inventory in homeownership, however possible, is critical moving forward.
While rising home prices are a sign of opportunity for agents across the nation, it’s important to understand the bigger picture. Healthy supply and demand in the real estate market promotes equity and access in homeownership. As Wisconsin’s economy stabilizes, the hope is the red hot real estate market will continue to simmer without erupting into an affordability crisis.
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