Homebuyers Face Fierce Competition As Market Inventory, Affordability Slide

Jamie Desjardin-Rummel entered the COVID-19 season expecting the housing market to crash. A broker associate at Benefit Realty in Franklin in Milwaukee County, Desjardin-Rummel found quite the opposite to be true.

“It got pretty crazy,” she said.

In her experience, a lot of sellers are apprehensive to list their homes. And because the housing market was already seeing high demand before COVID-19 struck, buyers are facing competition from multiple other prospective homebuyers.

“Things are going a lot higher, they’re getting a lot crazier, and we have to be a lot quicker to get our people in the houses,” she said.

Sales in Milwaukee County in May decreased more than 33 percent compared to the May prior. For those who are buying, the competition is fierce. Homes are moving off the market quicker. Months of available supply dropped sharply, by about 20 percent compared to 2019, according to the Wisconsin Realtors Association (WRA).

Statewide, there were about 26 percent fewer home sales compared to May 2019. New listings saw a 27 percent decline compared to the same time last year.

Affordability is worsening too. Median home prices across the state increased by about 6 percent.

Certainly the worsening labor market caused by the pandemic had some effect on the housing market, said David Clark, a professor of economics at Marquette University who serves as a consultant to the WRA.

But what countered that was record low mortgage rates.

“We have never seen 30-year fixed rate mortgages as low as they were in the month of May,” he said, noting that those rates fell to 3.23 percent in May. The previous low was in late 2012, when they hit 3.35 percent. “Those are awfully favorable credit conditions for someone who’s looking for a home.”

That’s great news for sellers, said Desjardin-Rummel.

“As long as you’re pricing the house in alignment with market value, it’s selling instantly,” she said. That’s the case even in areas with traditionally a lot of inventory, such as Milwaukee, she added.

Sellers also have the upper hand when deciding how much contact they’d like with prospective homebuyers, with some preferring the least amount of contact as possible to curb any exposure to COVID-19. Desjardin-Rummel estimated about 25 percent of the buyers she works with would rather do virtual tours of the home and make their offers online.

“I would say probably a good three-fourths of them are doing it the old school way where they’re actually going in,” she said.

Desjardin-Rummel said her advice for people trying to buy a house right now is to not get discouraged. She advised keeping an eye out for friends or family who are selling as a way to purchase off-market.

She also said that buyers should try to find a home that needs a bit of work.

“The market isn’t going to stay this way forever, and you’d hate to get into your first house, purchase something at the peak of value and not have any equity in it when you decide to upgrade,” she said.