The craziness of the 2022 market — one home I listed last year sold for $84,000 over the asking price! — might be over. Wisconsin home sales fell nearly 15 percent last year compared to a record-shattering 2021. Total listings dropped almost 18 percent, too. But, according to the Wisconsin REALTORS® Association, the median home price for 2022 rose to $264,600, while the average mortgage interest rate more than doubled from 3.1 percent in December 2021 to 6.6 percent in December 2022. That increase goes a long way toward explaining the decrease in total sales and total listings.
What does all this mean for 2023? Despite the slowdown, the home market in south-central Wisconsin remains quite active. Many homes are still selling for $5,000 to $10,000 over asking price, and you still might need to waive some contingencies to have a realistic shot at buying the home you want.
Here are three key market points to keep in mind as you prepare to buy or sell this year:
1. Interest rates likely will never be as low as they were at the height of the pandemic.
Artificially low interest rates helped keep the housing market afloat in 2020 and 2021 — and partially into 2022. Last February and March, interest rates still hovered around 3 percent. By late in the year, they had hit 7 percent and were climbing fast toward 8 percent. Interest rates impact monthly mortgage payments, and the higher they go, the more potential buyers they squeeze out of the marketplace for homes in specific price ranges. But don’t wait around for interest rates to drop again; economists predict they likely will never be as low as they were during the pandemic.
2. Tight inventories will continue, but that shouldn’t deter you.
One major fallout of increasing interest rates is fewer homes on the market. The majority of savvy homeowners refinanced when interest rates were historically low, and if they sell now, they’ll be forced to pay higher interest rates on their new home. That said, we are still in a seller’s market, as supply remains low and demand stays high. Not all homes are moving as quickly as they did the past two years, though. Previously, homes received multiple (sometimes dozens of) offers within days of going on the market. Now, some homes are sitting on the market for a variety of reasons, which tilts the scale in the buyer’s favor.
3. A real estate professional can help you navigate all of this.
Whether you’re buying or selling, working closely with a real estate pro as early in the process as possible can help you maximize dollars. For example, good REALTORS® understand the local market inside and out; they know what’s selling and what’s not, and they have ideas about the best strategies for both selling your home and buying a home. For example, if a home has been on the market for a while, a professional can suggest to a buyer such options as increasing contingencies, making a lower-than-asking-price offer or agreeing to a smaller down payment. For sellers, a professional can recommend the best times to enter the market and offer considerations to increase the home’s value and improve its marketability.
As always — and perhaps now more than ever — I’m here to help.