Wisconsin home sales took a hit last month, posting a 10.2% year-over-year decline that real estate professionals say highlights the shortage of homes on the market.
According to the National Association of Realtors, home sales declined nationally by 2.4% in March compared to the year prior. Wisconsin saw a much larger dip and homes extended their average days on market for the month despite seeing the same inventory level from a year ago.
What could be dropping sales despite the same inventory levels could be the selection of housing for sale tied with rising home prices, according to Chris DeVincentis, board chair of the Wisconsin Realtors Association and an agent with Legendary Real Estate Services.
"The mix of property right now, with still being short of inventory, is really a big key factor," he said. "If it's more of the same type of property that's selling slowly, I think you're going to see a fall off in sales."
DeVincentis sees more fixer-upper homes on the market, while homes in good condition sell for more than most buyers can afford. Prices increased by $11,000 year-over-year to a median price of $310,000, according to data from the Wisconsin Realtors Association. In Milwaukee, home prices jumped 15% compared to one year ago.
Houses that may need work have little owner-occupant interest likely due to the additional costs needed to repair the home, DeVincentis said, and the market for them is usually made up of investors outbidding one another.
“You either buy it with the work done, most of the work done, or you have to do the work yourself. You may not, as a first-time buyer, have the money to do the work,” said DeVincentis, who has noticed a historically high level of home flipping activity in his market of southeast Wisconsin.
Mike Ruzicka, president of the Greater Milwaukee Association of Realtors, added that current interest rates and a lack of inventory have discouraged homeowners from listing, leaving “bottom of the barrel” homes to sit on the market.
“We’re in a little bit of a hangover from the pandemic where there’s almost nothing left to sell because the people who would normally sell probably sold, and there’s nowhere for people who would like to sell to move to, especially now that interest rates have gone up,” said Ruzicka.
The lack of new construction exacerbates the issue, he added. The state increased its housing stock by just 5.8% from 2013 through 2023, according to a U.S. Census Bureau data analysis by industry research firm Construction Coverage. In contrast, Utah, Texas, and Idaho increased housing by more than 20% in the same period.
A 2023 report from research group Forward Analytics found Wisconsin needs 227,000 new housing units by 2030 to meet demand. It's a trend that’s been happening for nearly two decades since the Great Recession.
All regions in Wisconsin saw drops in sales, ranging from a 2% decline in the west to 15.3% declines in the north, according to data from the Wisconsin Realtors Association.
It’s nothing to fear just yet, advises Mark Eppli, director of the University of Wisconsin-Madison’s real estate department.
“I think that it could be attributable [to] some sales noise rather than the start of a trend,” he said in a statement. “For now, nothing to be worried about, however, if the 10% year-over-year decline in March is repeated for the coming months of April, May and June, that is a significant concern as those are the key sales months of the year.”
