MILWAUKEE — The Metropolitan Milwaukee real estate market hit the brakes again in May due to efforts to control the coronavirus pandemic, according to a press release issued by the Greater Milwaukee Association of Realtors.
The lack of homes for sale was the main drag on the market, resulting in large but anticipated year-overyear decline in sales.
Understandably, there was some hesitation on behalf of sellers to list their homes, fearing the spread of coronavirus. Homebuyers, on the other hand, are confident in the market and ready to make up for lost time, as strong mortgage application numbers attest to.
Summer is gearing up to be the high point of the 2020 buying season. Potential sellers should act now to include their house in the mix and capitalize on the demand that exists.
The housing market recovery index compiled by REALTOR.com shows the Milwaukee market up 15.8 points, climbing back to a level of 84.2 as of June 6, up from the low point of 68.4 on April 18. The baseline of 100 was set on Feb. 1.
While there were 2,136 sales a year earlier, the fact that 1,598 sales did occur in the economic climate the region experienced in May shows the resilience of the market and the level of demand among consumers, according to the GMAR.
Active sellers wanted their realtors to continue marketing their homes safely, and buyers were actively viewing homes online and virtually.
Brokers have reported a large jump in web traffic during the length of the governor’s Safer at Home order.
Listings were down 19.7% in the metropolitan area, and down by 21.9% in Southeastern Wisconsin, in May.
One measure of the market’s apparent rebound are the active listings available in the Metro MLS system for REALTORS® to search.
In May, the number of active listings was 5,425, up 2.2% from April’s 4,889.
Seasonally adjusted inventory is calculated by taking the homes available for sale in each month and comparing them to the average sales of the past 12 months. This tells us how many months it would take to sell the existing homes on the market.
The seasonally adjusted inventory level for May was 3.1 months, up from April’s 2.8 month level. For comparison, the seasonally adjusted level was 3.8 months in May 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 5,425 current listings providing 3.1 months of inventory, the market would need an additional 5,000 units available to push inventory to six months.
We can also calculate inventory by subtracting the listings that have an “active offer” from those available for sale in each month. Approximately eight in 10 listings on which buyers place an offer go to a complete sale. This provides a different perspective of the quantity of homes available on the market.
Subtracting the 2,610 listings with an active offer from current listings presents an effective inventory level of 1.3 months, down from April’s 1.4. A year ago, the same calculation showed May’s inventory level at 1.8 months.