Join us as we dive into the latest updates affecting the Brown County residential real estate market. In this article, we’ll be focusing on the continuing challenges posed by low inventory levels and the implications for both buyers and sellers in Brown County. So, grab a cup of coffee, and let’s get started.
The Brown County Housing Market at a Glance
As of the end of July, the entire market (number of units) is up 8% from last quarter but down 22% this vs last year. The total dollar volume, $368,774,610, is down 13% which is reflected in the average price increase of 12% ($355,531). Average days on the market remains the same at 53 days. A balanced market has a 6 month supply of inventory on the market. We have a 1.91 month supply.
Breaking it down into price categories (number of units) looks like this. $300,000 and under is down 36% (1.68 month supply), $300 to $500,000 is down 9% (1.64 month supply) and $500,000+ is up 9% (2.92 month supply).
The most concerning statistic is the critically low inventory levels, with just 185 listings throughout Brown County. By far the highest demand price category in our area is $300,000 and under. In that category, there are only 31 homes currently available without an offer.
This is why you continue to hear about multiple offers, prices not going down and it continues to be highly competitive. In aggregate, there are fewer buyers but there are disproportionately fewer opportunities hence properties tend to fly off the shelf as soon as they list (if they are priced well).
Understanding the Low Housing Inventory
The primary driver behind the low inventory can be attributed to interest rates. With nearly 65% of current mortgage holders locked in at rates below 3%, many homeowners find themselves unable or unwilling to afford selling and buying simultaneously. For this to unlock mortgage rates will need to get to the mid 5’s. At that point, you will see a significant supply of inventory enter the market but you also see a significant increase in the number of buyers entering the market who have been sitting on the sidelines waiting.
This perfect storm of higher housing costs and increased interest rates has led to a significant reduction in the supply of available inventory. It is as simple and complicated as that.
Effects on Buyers and Sellers
From a buyer’s standpoint, the landscape is dominated by cash transactions, accounting for many of the deals that come through our agency. This trend is largely fueled by younger Baby Boomers who are redirecting their inheritances to help their children with down payments. As a result, those relying on traditional financing are, unfortunately, at a disadvantage when competing against cash buyers. Gen Xers and younger Baby Boomers are thinking differently about legacy wealth and want to help their children while the kids are young enough for it to make a difference in their lives.
Sellers, on the other hand, face the challenge of pricing their homes appropriately. While the market is swift for well-priced properties, with multiple offers still a common occurrence, it’s essential to avoid overpricing your property, as buyers are unwilling to overpay. It’s important to seek guidance from a knowledgeable Real Estate Agent so you can understand the reality of the market and set realistic expectations for the price your property can net. Overpricing is a real thing. You will sit. Fairly priced properties often enjoy multiple offers which oftentimes results in a higher sale price and/or very favorable terms for the Seller. That opportunity is lost forever when you overprice. You get that chance only once.
The Impact of Short-Term Rentals in our Area: A Case Study
The increase in investor interest in buying Lambeau District properties in Ashwaubenon has exacerbated Ashwaubenon’s inventory shortage and is also dramatically impacting that area’s schools and local businesses. Investors purchase 75% of homes that go up for sale in Ashwaubenon. Great on the game weekend but not so great for neighborhoods. Municipalities all over the country are faced with the tricky task of finding a balance that supports free enterprise while preserving communities. Ashwaubenon recently passed an ordinance requiring a six-night/seven-day stay. The Lambeau District has a number of new listings largely in part to the change in regulations and potential changes to come. Bottom line…When considering purchasing an investment property be very aware of the local ordinances and keep in mind they will likely be changing as time moves on. Cities everywhere USA are grappling with how to manage this trend. How people (especially younger people) own homes is changing. Renting out rooms or portions of homes is pretty common to earn additional income. It will be very interesting to see how this is navigated in the future. Buyer Beware!!!
Housing Market Predictions for the Remainder of 2023
Even if inventory were to increase this year, it’s important to note that it remains critically low compared to previous years. Inventory levels are the lowest they have ever been. This fact – coupled with rising home prices and the high cost of new construction – indicates that the market is unlikely to experience a significant downturn in home values in the near future.
Interest rates were predicted by many to get into the 5’s in 2024…Now that prediction is questionable. With a Fed rate increase predicted in late July, it looks like rates will likely hover in the high 6s to mid 7’s for a while. As stated earlier in order to unlock inventory the rates need to get into the mid 5’s. When the rates get to that level more prospective buyers will re-enter the market which will keep pricing at current levels or even begin to increase again. An election year is right around the corner which is always helpful.
However, the challenges for young people attempting to enter the market will persist, potentially leading to increased intergenerational living arrangements. I read in a recent study that the average age a US adult is leaving home is now 34. 36 by the time they are fully independent and ‘adulting’.
The struggle is real for young people to land housing.
Baby Boomers and Gen X remain in a strong position in the Real Estate market in all markets and in all price categories.
Choosing the Right Real Estate Agent
With over 2,600 agents in our area, selecting the right agent is always crucial. It becomes critical when inventory is SO tight and the market is ultra-competitive. It’s essential to partner with a market-savvy and financially stable agent who will provide impartial advice and guide you in the right direction for you, taking your budget and the reality of the market into consideration. There are a lot less sales and a ton of agents. I have story after story after story of people who wished they would have made the best choice when choosing an agent and chose instead because they did not want to hurt someone’s feelings or there was a lower commission involved. Real Estate is like the Wild Wild West. Choose wisely!
By understanding market dynamics and adjusting expectations accordingly, you can make informed decisions about your property. Remember, we’re here to help you every step of the way. We continue to perform for our clients at the very highest level and look forward to assisting you if needed!