Wisconsin Mortgage Seekers Drive Down Local Housing Prices
Milwaukeeans’ love of discounts is on full display in this year’s Wisconsin housing market.
“With flooding inventory out there, it’s not uncommon to see offers at 10 percent below asking price,” said Greater Milwaukee Association of Realtors President Dave Schmidt Jr.
Double that price cut if the property is in danger of foreclosure, said Robert A. Jansen, president of the Milwaukee listing service ForeclosuresWI.com.
Post-boom conditions have put Wisconsin mortgage seekers in the driver’s seat, agents report, and they’ve flattened sales prices. Metro Multiple Listing Service’s Tuesday report on first-quarter 2007 existing-home sales in the four-county market showed the impact on prices:
• An $18,155 average housing price drop in Ozaukee County, to $288,777 from $306,932 a year earlier.
• An $11,039 average price drop in Washington County, to $219,063 from $230,102 a year earlier.
• A $16,288 average price drop in Waukesha County, to $290,056 from $306,344 a year earlier.
Milwaukee County bucked the downward trend, posting a $12,719 average price gain, to $185,388 from $172,669. MLS statistics suggest a climate of hard bargaining.
At 3,596 sales, volume was 6.1% below first-quarter 2006. Plus, it took up to five weeks longer to close the deal - and some properties were on the market for a second or third time.Real estate agents said they worked hard for their money - fielding offers, counter-offers and counter-counter offers between bargain-seeking buyers and profit-minded sellers.
“We’re seeing many people writing offers at 10 percent to 20 percent below asking price. Buyers are less afraid to insult sellers,” said Roy Scholtka, mortgage broker-owner of HomeSale Realty in West Allis.
Buyers are picky. And with 10,246 new listings hitting the market so far this year, they can afford to be, said Schmidt, who runs Dave Schmidt Realty in Milwaukee.
“Listings are up 13 percent over last year and 50 percent over 2005,” Schmidt said. Hardest hit by the flood of offerings are “these outer communities that relied heavily on new construction. And with gas prices up, being close to work has become more of an issue. Nobody wants to have to fill up that gas tank.”
A new, troubling issue in metro Milwaukee’s housing resale market is the rise of defaulted home mortgage loans, as creditors move to seize homes for the owners’ unpaid debt.
In this year’s first quarter, 1,196 foreclosure actions have been filed in Milwaukee County, plus 210 in Waukesha County, 79 in Washington County and 34 in Ozaukee County. Jansen sees homeowners trapped by the rising payments of their adjustable-rate mortgages and a housing market too soft to allow a quick sale.
Investors are buying up many of these distressed properties before they’re sold at auction, Jansen said.
“It’s a win-win situation,” Jansen said. In return for a nice discount on the property, the investor “can help a homeowner avoid foreclosure, save their equity and prevent further damage to their credit,” he said.
Higher foreclosures “are not suppressing prices here, at least so far,” Schmidt said. “But they are adding to inventory.”
Most housing and finance economists predict an upturn within a year, as the market corrects for the high-flying sales and heady price run-ups of 2001-’05. Meanwhile, however, the “sold” signs are likely to appear in the yards of flexible home sellers, said Donald J. Moore, president of Houses .com in Elm Grove.
“Everybody I talk to is wondering, ‘Why isn’t my house selling?’ It’s because they’re still thinking they should be getting 5 percent price appreciation a year,” Moore said. “You should be happy if you can get ‘04 prices.”
SOURCE: Milwaukee Journal-Sentinel