Madison, Wis. - The Wisconsin REALTORS® Association (WRA) released its September 2023 Wisconsin Real Estate Report today. Existing Home Sales are limited by tight inventories, driving up the median prices. September 2023 sales decreased 18.4% compared to September 2022, and the median price rose 9.3% to $295,000. Months of inventory have improved in every region of the state, across all price ranges and for all urban-rural classifications, but still remain far away from a balanced market.
Joe Horning, 2023 Chairman of the Board of Directors, Wisconsin REALTORS® Association, noted promising news on listing pictures: “For the second straight month, the annual decline in new listings has been below 4%, which is a significant improvement from earlier trends where the decline was much larger. Now we’re starting to see promising signs for total listings as well, which had the lowest annual reduction in total listings in nearly two years. Hopefully these supply trends continue.”
Michael Theo, President & CEO, Wisconsin REALTORS® Association, commented on unmet demand persisting despite higher mortgage rates: “Mortgage rates are at their highest point since late 2000, which priced a lot of first-time buyers out of the market for now. This means our available supply goes further, which is why our months of inventory have improved slightly. But we still have a long way to go before millennial demand is met and the housing market becomes balanced.”
Dave Clark, Professor Emeritus of Economics and WRA Consultant, highlighted that significant housing price corrections are unlikely: “The Great Recession brought a significant home price correction as the housing bubble burst and foreclosures spiked. We’re in a much different situation now. Although rising home prices and rising mortgage rates have pushed affordability to record-low levels, there is very little chance we will see a similar price correction in this market. Current owners are well positioned to weather an economic downturn given the mortgage rates they locked in, and strong demand from millennials will keep housing prices from falling like they did after that recession.”
REPORT HIGHLIGHTS:
- The increase in mortgage rates has affected both the demand and supply sides of the market. Current owners, many of whom refinanced during the period of low mortgage rates, are reluctant to list their homes since that means financing a new purchase at much higher rates. Likewise, some buyers have pulled out of the market given the higher cost of financing. These higher rates are particularly challenging for first-time buyers who rely more heavily on financing to purchase a home.
- Overall, supply remains very tight. With just 3.3 months of supply in September, the state remains well short of a balanced market that is characterized by six months of supply. With only 18,275 total listings in September, we would need a 77% increase in listings to get back to a balanced market.
- Affordability continues to suffer. The Wisconsin Housing Affordability Index measures the percent of the median-priced home that a buyer with median family income would qualify to purchase assuming a 20% down payment and a 30-year fixed-mortgage at current rates financing the remainder of the balance. The index held at 123 for the second straight month, which is its lowest point since the WRA began tracking the index in 2009. This is a 14.6% decline from last year when the index stood at 144.
FULL REPORT
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Last Update: Oct 19, 2023 9:00 am CDT
