March 2020 Home Sales Report
Pre-coronavirus First Quarter Housing Market Strong
Date: April 20, 2020
MADISON, Wis. — The Wisconsin
existing home market was on solid footing in the first quarter of the year and
was on track to have strong sales in the spring and summer. That’s before the
COVID-19 pandemic hit and severely constrained economic activity in the state. March
home sales were strong, with closings of existing homes up 7.9% compared to
March 2019, and median prices rising 12.2% to $207,500, according to the most
recent analysis of existing home sales by the Wisconsin REALTORS®
Association (WRA). This was the first time the March statewide median price exceeded
$200,000, due in large part to the very tight inventory of homes for sale. There
were just 3.6 months of available inventory in March, indicating a strong statewide
seller’s market. On a year-to-date basis, comparing the first three months of
2020 to that same period in 2019, home sales rose 6.7%, and the median price
rose 9.2% to $196,000.
“This report revealed the market had strong demand,
pushing prices higher due to a limited number of homes for sale,” said WRA Chairman Steve Beers.
He noted there were also promising signs with a slight improvement of new
listings in March, rising 1.2% from the level 12 months earlier. “When the
market starts to heat up, it’s always good to see a bump in new sellers listing
their homes,” said Beers. “But that was ‘BC market — before-coronavirus,’”
he said. Nearly all the homes that closed in March had signed contracts four to
six weeks earlier, which was before the pandemic established a foothold in the
U.S. “We’re in a completely different market now,” said Beers.
“We had a very strong start to 2020, which in most years
would be a prelude to an even stronger peak housing market season in the spring
and summer, but not this year,” said WRA President & CEO Michael Theo. The
lockdown of much of the economy as a result of Gov. Tony Evers’ “Safer at Home”
order has likely put the brakes on the housing market for at least the next few
months. “It’s understandable that many buyers and sellers don’t want to risk
exposure to the virus, and so they may put their plans on hold for the
short-term,” said Theo. The WRA tracks daily the number of residential listings
that are either canceled, expired or withdrawn from the market. From January 1 through
March 13, which is the date the U.S. government declared a national emergency,
a total of 60,560 units had been canceled, expired or withdrawn from the market.
This compares with 54,690 units over that same time frame in 2019, which represents
a 10.7% increase over the last year. “Fast-forward just one month, and we’ve
seen a big spike in these withdrawals,” said Theo. If we look at the January 1
through April 15 period, the increase in cancellations, expirations and
withdrawals this year compared to last year is now 22.2%. “The bottom line is
that sellers are increasingly deciding to sit tight until the state lifts the order
to stay home,” said Theo.
On the bright side, Theo points out that technology
offers several viable and safe options for buyers and sellers to remain engaged
in the market. “There’s a lot of details online, and REALTORS® can
set up virtual tours of listed homes so that potential buyers can evaluate a variety
of opportunities available in this market without leaving their homes,” he
said. Theo noted that once it is safe to move around, REALTORS® stand
ready to start showing homes again. “We’ll ramp up very quickly once we get the
all-clear,” said Theo.
In the meantime, expect significant distortions in the
monthly sales figures through much of the summer, according to David Clark,
Marquette University economist and consultant to the WRA. “Even if we do have a
quick economic rebound once the pandemic winds down, it will take time for the
monthly sales figures to return to normal,” said Clark. He suggested that the
lag between the signed contract and the closing will likely depress sales through
at least mid-July. “There should be good opportunities when the housing market
does normalize, with a moderation of the price appreciation and very low mortgage
rates,” he said.