What's Going On in the Real Estate Market in the Geneva Lakes Area - 2024 Q1 Recap

Dated: April 7 2024

Views: 213

By Jade Goodhue

Are We In a Seller’s Or Buyer’s Market? Why Should You Care?

 

If you’re a buyer or seller in SE Wisconsin, asking if we’re in a sellers’ or buyers’ market is arguably the most important question. That is because it depicts the supply and demand relationship which in turn dictates home prices, the level of competition, and negotiating power. Higher months of inventory is good for buyers because it means that the supply of homes is outpacing demand which puts downward pressure on prices. Lower months of inventory are good for sellers because it means buyers have fewer choices which drives prices up. It also tells you where we’re at in the boom and bust cycle of the real estate market.

 

Source: MLS

 

The latest data from the Metro MLS shows that we’re at 3.45 months of inventory here in Walworth County WI, which means we’re still technically in a sellers’ market but we’re inches away from being in a balanced market. What this means is that sellers should still have a bit of the upper hand, but buyers have a lot more power to make demands and ask for concessions. However, there’s much more to these numbers when we unpack them at a more granular level.

Is the Inventory of Homes Still Low?

 

At first glance at the chart below, we saw an unusually steady flow of inventory of new homes this first quarter and a rise in active listings which means more homes are sitting on the market here in Walworth County WI. This should be good for buyers, bad for sellers…

 

Source: Metro MLS

Is Buyer Demand Slowing?

 

YIKES! We typically expect 81 Continuous Days on the Market (CDOM) in December or January, but not in March on the cusp of the spring market! The CDOM is the number of days from the listing beginning date until it was pended. 




Source: Metro MLS

Unraveling Confounding Data

 

But how do we have more inventory in the face of the combined headwinds of the lock-in-effect and lack of new construction? Many homeowners are still hesitant to trade their sub-4% interest rates for higher ones, and the number of Wisconsin building permits as of the 4th Quarter of 2023 is nothing to brag about.

 

On a national level, inventory is still woefully short. According to researchers led by Nick Villa, even if 2024 turns out to be a year of solid home construction, the total housing deficit will remain in the 1.5 million-2 million range, with a shortfall of 1.1 million-1.2 million single-family housing units. The years of under-building since the Great Financial Crisis, which has created a sizable shortfall in housing stock. From 1968 to 2006, the US averaged about 1.1 million units of single-family completions per year. Then, from 2007 to 2023, that figure hovered near 765,000 units, as illustrated in the chart below. 




 

According to the Wisconsin Builder’s Association, Kenosha County is woefully behind in construction, Walworth County just climbed into the green while Racine seems to be on a mission!

 

Source: Wisconsin Builder’s Association

 

One or two good years of new housing construction isn’t enough to make up for the affordability-constrained demand. In 2023, multifamily completions climbed by 11.1% sequentially to hit a seasonally adjusted 509,000 units. Single-family completions, too, finished the year strong with an 8.4% jump to hit 1.056 million units. But there is still a long way to go before solving the chronic housing shortage.

How’s the Real Estate Market in SE Wisconsin in Q1 of 2024?

Source: Metro - MLS. Homes sold in SE Wisconsin in Q1 of 2024

 

  • The most in-demand homes are between $200K-$500K based on homes that have sold in the first quarter of 2024 according to the graph above. 

  • According to the Wisconsin Realtor’s Association as of February of 2024, the median price of homes in Walworth County is $325K. 

  • But the median LIST price of homes in Walworth County is $459K which is drastically higher than the median SALE price.

 

The median list price depicts the price sellers are listing their homes for, whereas the median sale price shows the price points most frequently purchased by buyers. As you can see, that’s about a $100k-$200K difference. 

 

Source: Metro MLS

Bottom Line - What We Have Is an Affordability Crisis

 

In other words, higher-end homes are coming online and sitting creating a stockpile of inventory, while the inventory of homes that the majority of buyers are looking for is still woefully low. They are being bidded up and scooped up by buyers who want the home leaving those who need them to struggle. 

 

  • Buyers who want higher-end homes are experiencing a balanced market.

  • Buyers who want median-priced homes are experiencing a sellers’ market.

  • Sellers with higher-end homes, if you want your home to sell quickly, you’ll either have to be more negotiable on concessions and/or mindful of getting fair market value.

  • Sellers with homes around the average median price, you will have the luxury of asking for a higher price and with fewer concessions as there is a surplus of buyers to choose from.


If you’re looking to sell or buy a home in SE Wisconsin, give us a call or text at 262.204.5534 or email me at jade@legendaryrealestateservices.com.

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Chris Devincentis & Jade Goodhue

Jade and Chris co-founded Legendary Real Estates Services during the start of the 2020 pandemic. With Chris’s background as a real estate agent and broker since 1990, and Jade’s background....

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