'The pandemic has not slowed demand one bit' in Wisconsin's housing market
Elizabeth Duthie has been thinking about buying her first home for years.
At the beginning of September, Duthie saw a place she loved online so she called a real estate agent.
"It was no longer on the market," Duthie said.
Duthie, a 38-year-old researcher in the Center for Urban Population Health at the University of Wisconsin-Milwaukee, was shopping in the perpetually hot market for houses priced under $250,000.
That market, in metro Milwaukee and across Wisconsin, has remained strong into fall.
Unlike the typical pattern of a busy spring and summer, Milwaukee's real estate market started to warm up late this summer and has yet to cool off. In a typical year, sales tend to drop as temperatures fall.
Duthie's real estate agent, Beth Jaworski with Shorewest Realtors, said many of her clients are deciding to go forward with long-anticipated moves
"The pandemic has not slowed demand one bit," she said. "The problem is lack of inventory. We've had lack of inventory for a few years. It was just really made worse with the pandemic."
The metropolitan Milwaukee housing market is making up for time lost this spring during the state's stay-at-home order. Sales in the four-county area were up 28.2% in September compared to the same time last year, according to the Greater Milwaukee Association of Realtors.
The hot market exists across the Badger State, not just in southeastern Wisconsin.
“It’s super-bonkers for us in central,” said Paula Hall, executive director of the Central Wisconsin Board of Realtors. “Green Bay has always had a relatively hot market. For us to be as busy, crazy as it is, is a little strange for us. We tend to be middle of the road, middle of the state.”
Real estate agents, moving companies and industry officials say there’s nothing soft about the current housing market, calling it “busy,” “crazy” and “completely insane.”
They attribute their very busy summer and fall to three things: a shortage of homes for sale, 30-year fixed mortgage interest rates below 3% (the rate hit and all-time low of 2.81% on Thursday) and a huge volume of requests to refinance existing mortgages.
The result: Finding a right-priced, attractive property is more difficult now than it has been in years.
Prices are increasing with strong demand from buyers. The Greater Milwaukee Association of Realtors said a lack of inventory, especially for properties under $300,000, is pushing up prices. Listings have been down around southeastern Wisconsin.
"There is little doubt that 2020 will wind up in much better shape than many had worried about at the beginning of the pandemic," the Greater Milwaukee Association of Realtors wrote.
Duthie plans to close on a three-bedroom Cape Cod-style home in Wauwatosa at the end of the month. Duthie, who has been living in a one-bedroom apartment on Milwaukee's east side, is eager to use a spare bedroom as a dedicated office space. She might adopt a dog, too.
Buyers should anticipate not only needing more time to find the right house, but also more time to complete their purchase once they do.
Victoria Seehafer is president and owner of Century 21 Aspire Group, which sells properties in the Manitowoc-Two Rivers area.
Seehafer said it used to be possible to go from accepted offer to closing in about 30 days. Now, with the volume of refinancings happening, Seehafer said an appraisal can take weeks while closing any sale requires a minimum of six weeks.
“Everything is very bottlenecked right now because people are refinancing,” Seehafer said. “We (real estate agents) have to juggle the things we didn’t always have to, like appraisals. All those pieces have to fit together. It’s taken a bit of strategy to get dates and deadlines together so they work at the end.”
Seehafer said title companies in the Manitowoc-Two Rivers area have “handled this really, really well” by hiring extra staff to work through the purchases and refinancings.
It’s not so easy in other parts of the business.
'Unlike anything I've seen'
Garret Alford, owner of Oshkosh-based Appraisal Professionals LLC, said he can conduct three property visits and complete four appraisal reports in a day, at most. Right now, he’s getting 10 to 15 appraisal orders per day. He said it takes about a month for him to turn around a job right now and said buyers are caught in the middle of a system being overtaxed.
“I’m always steady, but I would say this year, due to record low (mortgage) rates, the volume we’re doing is unlike anything I’ve seen before,” Alford said. “You just try to do your best. I’m happy with doing what I can do.”
The industry has remained busy into September, which has helped businesses like Economy Movers make up for revenue it lost this summer, said Steve Marquardt, general manager for the Green Bay-based company.
"We've been able to sustain operations," he said. "We had a few guys on partial unemployment and we spread the hours around rather than seeing one guy get 50 hours and another guy get 20 hours. But it wasn't a typical summer where they're working 50-plus hours a week, which had been normal."
Refinancing requests rise
Marquardt's crews are a little less busy than bankers, appraisers and inspectors working to keep up with the volume of refinancings occurring as the interest rate on 30-year fixed-rate mortgages has dropped below 3%.
The Mortgage Bankers Association’s quarterly finance forecast showed mortgage purchase amounts declined 2% year-over-year in the second quarter, from $355 billion financed in 2019 to $348 billion in 2020.
MBA also tracks the number of mortgage applications through a weekly survey that covers 75% of all national mortgage applications. The weekly reports indicate the number of mortgage applications rise and fall from week-to-week, but have increased 28% to 40% compared to the same period in 2019.
All the while, mortgage refinancing requests continue to become a larger volume of the originations reported each quarter. In the fourth quarter of 2019, 55% of mortgages started were for refinancing. In the second quarter of 2020, that number had risen to 63%, MBA reported.
Source: Milwaukee Journal Sentinel, written by Sarah Hauer