ASHWAUBENON (NBC 26) — Home sales have fallen throughout Wisconsin during the past year, in large part due to a lack of inventory among Realtors, according to the Wisconsin Realtors Association.
A new report by the Wisconsin Realtors Association that was released Thursday shows home sales have fallen by a significant margin for five straight months, falling 28.1% in the past year.
Local Realtors say that's largely because less people are selling.
“Inventory is really still tight. It’s at almost a record all-time low," said Greg Buscha, leader of the Buscha Team at Landro Fox Cities Realty.
Experts say while Millennials and Gen Z are eager to become first-time home buyers, Baby Boomers are more hesitant to sell. This has created a surplus of demand with few homes listed.
“Baby Boomers are staying in their homes longer," said Dave Clark, an economics professor at Marquette University and consultant for the WRA. "They’re a relatively healthy generation."
Mark Olejniczak, the owner of Mark Olejnicak Realty, said in 2022 he saw unusually high demand with many homes being on the market for short periods of time.
“A home would get onto the market and then hit the multiple listing, the Realtors would set up the showings with their buyers and many of the homes could sell in a very short period of time with multiple offers," Olejnicak said.
The high demand and low supply have boosted the price of homes. The report found that the median price of homes rose 11.7% from February 2022 to February 2023. In Northeast Wisconsin, the median price increased 20% in that same time period.
In addition, higher mortgage rates have discouraged move-up buyers from selling. The report found that the 30-year fixed mortgage rate jumped from an average of 3.76% in February 2022 to 6.3% in February 2023.
“They’re hesitant to jump from a 3% mortgage on one house to a more expensive house that may be a 6 and a half percent mortgage," Buscha said.
"Mortgage rates affect the demand side because it affects the expense associated with buying a home," Clark said. "It also affects the supply side because a lot of those sellers ultimately are going to move to another owner-occupied home and they may need to take out a mortgage to do that.”
Clark says when we could see mortgage rates return to normal will all depend on when and how the Federal Reserve lowers inflation. He says it comes down to striking the right balance of reducing inflation without causing a recession.
“It really is very important to get inflation under control if you are to return to a period when you’re getting a mortgage at 3 to 4% as opposed to 5 or 6%," Clark said.