2020 was a turbulent year for the housing market worldwide. Will 2021 be a bit better, or should we prepare for the worst case scenario? What is in store for Milwaukee housing market in the next time period?
Before we look at the Milwaukee housing market forecast, it would help if we learned a bit more about the city itself. Milwaukee is Wisconsin’s largest city, and the fifth-largest city in the Midwestern US. It sits on the western shore of Lake Michigan, and with the population of around 600,000, it’s the 31st biggest city in the US. With all this in mind, it’s understandable that the city is always in need of a new real estate, and understanding the housing market is really important.
2020 was a year of change and chaos. With Covid-19 pandemic disturbing every aspect of our lives, it’s easy to see why any market predictions are difficult in such age. During the previous period, there were problems with the growing demand and low supply, while the rent prices were increasing. All of this made it great for real estate investors, who knew how to get the best from the situation. Then, the Covid-19 happened.
Impact of Covid-19 on the Housing Market
Covid-19 halted the evolution of the housing market, putting everything on a temporary hold. According to the research done by Realtor.com for September 2020, national inventory declined by 39.0%, while the newly listed properties declined by 13.8% nationally. This is all because people are afraid to list their houses, fearing new diseases and getting sick. The numbers were lower compared to those during The Great Depression in 2007-2008.
In 2020, the housing inventory reached historical lows. The interest rates on mortgages also dropped, which makes experts believe the market will quickly stabilize itself, as buyers will want to use the opportunity, and the sellers want to have as little competition as possible. There were also some changes in the demand, as more and more people decided to move away from metropolises and into the rural areas, with more privacy and less people. Single-family homes make it easier to stay safe in case of a new virus outbreak in the future.
Despite this, in the second half of 2020, houses were once again being bought and sold. It appears that, even though Covid-19 has certainly impacted the housing market in the entire US, most dramatic of changes weren’t that long-lasting. Some of the biggest differences are in the overall behavior and the way houses are viewed, as everything is moving towards digital era. This trend is likely here to stay. Real estate agents and investors alike are giving money to stay educated on the modern technology.
For a while, the statistics were rather discouraging. It seemed like it would be quite a challenge for any real estate investor or agent to survive in such surroundings. However, current Milwaukee housing market forecasts aren’t that gloomy. Of course, these are just predictions based on current trends, and in these uncertain times everything might be subject to change.
Current Housing Market in Milwaukee
Many factors influence the Milwaukee housing market 2021, including mortgage interest rates, inflation, employment, investments, immigration, current government assistance programs, and general health of the local economy. Still, there are some Milwaukee housing market shortages. For example, according to the data from August 2020, Milwaukee is a strictly buyer’s market. This is a huge change from January of the same year, when the market was more-or-less balanced. What does a buyer’s market mean?
A buyer’s market occurs in cases when supply exceeds demands. In other words, there is a high inventory of properties, sellers are listing their real estate, but there aren’t many interested buyers. This is usually looking good for buyers, as they aren’t facing much competition and can negotiate the price. Typically, this causes prices to decrease and homes will stay on the market longer. Sellers have to compete with one another if they want to sell their house fast. To put it another ways, buyers have the upper hand in these situations.
According to Redfin.com, as of October 2020, Milwaukee housing market is looking like this:
- Average sale price is $167,000, which is 14.8% more compared to the same time of the last year.
- This puts the average price of square feet at $121, 16.3% more than in past 12 months.
- Houses listed on the MLS go pending in around 47 days.
Considering the current state of the world, this isn’t too bad. The Milwaukee real estate market is still active, and homes are still being sold.
Milwaukee Financial Stats
When it comes to the living costs in the US, Milwaukee is ranked among the lower third. This hasn’t changed since the last few years. Without rent, monthly living costs for a four-person family are $3,702.56. It is considered one of the more budget-friendly cities in the US. The unemployment rate jumped drastically compared to 2019, when it was between 3% and 4%, and as of August 2020 is 8.9%. This is mostly due to the consequences of Covid-19, as the pandemic has disrupted functioning of most businesses and industries. However, as just a month prior, the unemployment rate was 10.1%, we can notice the situation is improving, and this is a trend that is expected to continue.
According to Zillow.com statistics from October 2020, median value of single-family homes in Milwaukee is $141,450. Zillow also notices that Milwaukee home values have increased 8.9% over the last year, and the growth is expected to continue. This is a quite uncommon occurrence in the buyer’s market, when prices are typically expected to reduce.
Milwaukee Housing Market Predictions for 2021
Having in mind past trends, not too much has changed in Milwaukee housing market, despite the Covid-19. Buying real estate can still be considered a rather worthy investment long term. However, one thing that changed is the amount of demand. While in the past years there was a slight shortage in houses, this has changed, and Milwaukee became a strictly buyer’s market.
Zillow predicts that home prices will go up by 5.6% by the end of August 2020. Covid-19 didn’t seem to stop the rising prices trend that has been ongoing since 2013. It did halt it a bit, but the prices continue to grow, steadily but surely.
Many real estate experts, however, expect a recession to occur in the entire US. This recession will surely have impact on the Milwaukee housing market, but there are some disagreements on the exact moment when it will occur.
- Zillow conducted a survey among real estate experts. 50% of them think the recession will happen before the end of 2020, while 35% think it will happen during 2021.
- 38% of National Association for Business Economics’ members anticipate a recession in the end of 2020, while 25% expect it to happen in 2021
- Bloomberg Economics developed a model that calculated a 100% chance of recession in October 2020. According to this, unemployment will rise and the nation’s longest-running expansion will end.
These predictions aren’t too cheerful, especially the Bloomberg Economics’ one. The recession will surely have impact on every state, and Wisconsin isn’t an exception. Of course, this is only a probability model that can have its flaws, but the signs of economic struggle have already started to show.
Despite all of this, according to Bizjournals, in 2020 there were 2,342 total house sales in Milwaukee by the end of August. This is 5.3% more compared to August 2019, so we can see that Milwaukee housing market is still holding up. In fact, ATTOM reported Wisconsin as one of the states least vulnerable to the effects of the Covid-19 pandemic. All of this is a likely sign that the next recession won’t have too much impact on Milwaukee.
As of October 2020, there aren’t many statistics available for Milwaukee alone, however we can look at the US data. According to them, in the second quarter of 2020, commercial property sales dropped about 60% compared to the previous year. This was a very fast decline, compared to what happened in 2008 recession. However, real estate crash isn’t expected, as single-family homes are still being sold at a pace that isn’t too much different from the usual ones. In other words, the market is impacted by the probable recession, but it is much more stable than it used to be, so while everything is expected to slow down, major changes aren’t expected. 2021 is probably going to bring us a financial crisis, but not a real estate market crash.
Is Housing Market Going to Crash in 2021?
Another dreadful prediction for 2021 is the house market crash that some people fear might happen. Is that a realistic option? Opinions are divided.
However, one thing that we have to notice is that, despite all the hardships, the housing market remained fairly stable throughout 2020, and there aren’t many indications that this will change in the following year.
The main positive sign are record-low mortgage rates, which means the house sales will continue. Also, both the Federal Government and the Federal Reserve have given out the implicit guarantee that they will do whatever it takes to support the economy – and this includes real estate, as well. This isn’t the certain sign of a threatening crash, but rather a standard procedure the government does in a crisis. As long the mortgage rates remain low, and the government helps the economy in any way it can, the crash isn’t likely to happen.
One of the biggest arguments of people claiming that the housing market crash is definitely going to happen is the rising number of forbearances. As of September 2020, over 7 million people are in mortgage forbearance program! However, no data exists to show how many of these are optional forbearance plans, or rather people who have applied for free stimulus money despite not needing the forbearance.
Not to mention that, despite the rising number of foreclosures, as the house prices go up, so does the equity. This won’t prevent the evictions or lower the number of people vacating their homes, but it can lower the overall foreclosure number, making the housing markets – Milwaukee housing market, as well – a bit more stable.
There are no guarantee what the Milwaukee housing market will look like in the next year. With Covid-19 and many other issues that the US and the world is currently in, no one can guarantee anything.
However, the forecast isn’t as gloomy as one might think. Despite Milwaukee currently being an explicit buyer’s market, the number of sales is slowly increasing during the fall, and the trend is likely to continue. The historically low mortgage rates can encourage buyers, and the government is doing everything it can to keep the economy from falling down.
The home prices have gone up, but there isn’t a huge change in the number of days that houses stay on the market for. In fact, as we’ve already mentioned, Wisconsin is one of the states that is less likely to feel the full impact in case of a recession. This is a great news, and it proves that being a homeowner in Milwaukee has many advantages compared to other, much more popular US cities.
Investing in real estate in Milwaukee might not be the best idea right now if you’re looking for a quick profit. However, if you’re planning on earning money in the long run, taking advantage of the low mortgage rates is a good idea. And if you’re just planning on buying a house, make a calculation whether or not this pays off. Sure, the prices have gone up, but with the low mortgage rate, you might be in for a deal without even realizing it.
And if you are a home seller that is looking to sell their house but fears listing it on the MLS in a buyer’s market isn’t a good idea, don’t worry. You can still sell your Milwaukee house. Just contact a local direct buyer, who might be able to help you much faster and with a higher degree of certainty. They might even pay in cash, which is a great way to help you through these difficult times.