The last three years of the housing market have read like a manic-depressive romance novel. Is the market up or down or somewhere in between? How is any homebuyer supposed to know whether to take the plunge or wait for lower prices?
Here’s a tip: Ignore all those doomsday reports coming off the national wire. It’s easy to forget that metro Milwaukee isn’t the nation.
True, the market here has slowed enough that it would take 10 months to sell all the homes now for sale in the metro area. But things could be worse. Much worse. It will take 57 months to sell all the condos on the market in Miami-Dade County and 38 months for the single-family homes. For single-family homes in Sacramento, it’s 13 months; it’s 11 in Atlanta and 13 in the Virginia suburbs north of Washington D.C. Even Seattle and Portland, Ore., two of the country’s strongest markets, have an 8.6-month supply of homes for sale, The Wall Street Journal reported recently. Anything over six months is considered a buyers’ market.
Yet in this metro market, “we’re still getting multiple offers on properties,” says Tammy Maddente, executive vice president of First Weber Group Realtors and board president of Metro MLS. This is particularly true along the North Shore, she says, and for houses in all price ranges.
“Our biggest problem is the media. Buyers have become paralyzed waiting for the bottom to drop,” she notes. “Well, I think the bottom has dropped. There isn’t a better time to buy. We have attractive rates and a lot of inventory.”
The market is stabilizing, with about the same volume of inventory for sale for at least five months, says industry consultant and Marquette University economics professor David Clark. “The [sales] … that we’re seeing now are still healthy volumes by broader historical standards.” They’re just lower than the record highs of 2005, he adds.
In both 2006 and 2007, the number of new home permits issued in the metro area was half the 2005 high of 3,700. That’s made builders – like home sellers – more willing to swing deals.
“Builders are having to adjust, going from a very hectic, overheated marketplace in 2004 and 2005 to one that is slower,” says Matt Maroney, executive director of the Metropolitan Builders Association. Part of that adjustment has meant adding incentives to get would-be buyers to build now.
Westridge Builders, which has three housing lines ranging from $200,000 to several million dollars, notes that its core business – homes in the $500,000 and up range – is still doing well. The more modest lines, however, are fairly stagnant. Overall, they’ve dropped from an average of 70 homes per year to 50-55.
To keep business moving, Westridge adopted aggressive marketing strategies, including $20,000 off the price of lot-and-home packages in its six subdivisions. For buyers who already own a lot, there’s a minimum $10,000 price cut, says company president Carl Tomich. With the incentives, Westridge’s 2007 sales were up 35 percent over 2006.
“It’s a very competitive market … If someone comes in and says, ‘so-and-so is doing this,’ then we’ll do our best to match it,” says Dave Dickie, sales manager for competitor Wolter Brothers Builders, which typically builds in the $200,000 to $300,000 range.
In short, there are real advantages to building your home in a slow market. “In this type of environment, you get the best people, the best quality materials and the best price. It’s an ideal time to buy and it’s not going to last,” predicts Michael Kaerek, president and CEO of Kaerek Homes and a 30-year veteran of the business.
His prediction is echoed by many others in the industry. “I don’t think it’s going to get any better than this,” Tomich says.
Clark is more measured, predicting “a buyers’ market for the next year or so.”