The newly promoted chief executive officer of the Wisconsin Association of Realtors has good news and bad news for prospective buyers and sellers.
WRA President and CEO Tom Larson said the good news is that there are signs of hope for buyers struggling with inventory shortages and high mortgage rates.
“We're seeing signs of improvement. There's hope,” Larson said.
The bad: It could take years to ramp up new home construction to the levels needed to significantly alleviate the current mismatch between a lack of supply of homes for sale and excessive demand for them, he said. was added later.
“The two largest generations in our history are still competing for housing while producing too few homes over the past decade,” Larson said. “It’s just the perfect storm.”
Larson will succeed Michael Teo, who will retire at the end of 2023 after 39 years at WRA and the past 12 years as CEO.
Larson was interviewed by USA TODAY NETWORK-Wisconsin after his promotion was announced on January 17th. The interview focused on what market conditions buyers and sellers can expect in 2024, what it will take to build enough housing to meet demand, and what will be at stake if that happens. The community hasn't caught up.
Wisconsin housing market 'regained some degree of health'
Inventories have improved in recent months, interest rates have fallen, and there are signs that the market is “regaining some health,” Larson said. This means buyers don't have to waive home inspections, buy sight unseen, or offer tens of thousands of dollars more than the asking price to stay competitive.
“It happens a lot less frequently than it did a few years ago,” he says.
As of Jan. 18, mortgage rates stood at 6.6% for a 30-year fixed-rate mortgage, down less than 1% from an October peak of about 7.8%. This means buyers will pay slightly less interest in their monthly mortgage payments.
However, that does not mean that the market has returned to its previous state, but rather that inventory is now closer to the 6-month equivalent, which indicates that the market is in “balance” between buyers and sellers. isn't it.
Market conditions remain unrecognizable to traditional buyers
Larson said buying a home remains a different experience that buyers who last purchased a home decades ago may not recognize or understand.
“They understand what it’s like to not find a home, to make offers on six or seven homes and not get them, to make an offer above list price and not get it accepted. No,” Larson said. “It can be daunting for some people.”
Residents and local governments need to understand the impact that buyers' inability to find a home has on their communities and economies.
“Every community in the state needs housing,” Larson said. “They need housing to attract the workers to do the work.”
What can homebuyers do to improve their chances?
Get ready.
Work with a mortgage broker who can help you navigate interest rate changes. Ask about down payments and other homebuyer assistance available in your area to protect against soaring home prices.
Mr. Larson also strengthened his collaboration with real estate agents who can help him stay on top of new listings and plan accordingly.
“Pre-qualify in advance, know what you’re looking for, and be prepared,” Larson said. “That's the best path to homeownership.”
What can sellers do to prepare?
Ironically, Larson said the best thing sellers can do when they decide to sell is find a new home and realize they'll have to pay more interest each month. .
“Sellers' markets are great, but buyers' markets are tough. Sellers need to become buyers, and that's the challenge,” Larson said. “Additionally, many sellers were locking in mortgages when interest rates were less than 3% and are now at 6.5% or higher. That's a barrier.”
What needs to happen to improve affordability and availability in Wisconsin?
a many More new owner-occupied housing units.
Over the past decade, Wisconsin hasn't built enough new single-family homes to meet the surge in demand from millennials and baby boomers. The number of permits for single-family homes has increased since hitting a low of 5,362 in 2011, but even the 12,291 permits issued in 2020 were a slump in the housing market, according to data from the Wisconsin Builders Association. This is far below the 17,400 new housing construction projects that started in 2006, just before the market crash.
Demand for housing will not abate, so states need to find ways to build more homes, especially those that are affordable to middle-income families, and significantly increase the amount of homes available for purchase on the market. There is.
Promoting construction of workforce housing is the current focus of the Wisconsin Association of Realtors
The five housing bills that Gov. Tony Evers signed last summer are supposed to solve the inventory problem, but they don't solve it, Larson said. The bill provides $525 million in funding to help build new homes, update older homes, and reduce the cost of some housing reforms.
The funding is aimed at encouraging builders and developers to build “missing middle ground” homes, or smaller homes similar to existing older homes, that can currently sell for $200,000. . Larson pointed out that a 1,300-square-foot home on a small lot cannot be built without financial assistance because the cost of building such a home far exceeds the selling price.
“We need a program that targets that (worker housing) population and housing for seniors who want to buy (tiny homes) but can't afford them,” Larson said.
Larson said WRA's future focus will be on working with local governments to focus on funding available for workforce housing development and regulatory changes that towns, villages and cities can enact to encourage housing construction. He said that there is.
Jeff Bollier (920) 431-8387 orjbollier@gannett.com. Follow him on Twitter @JeffBollier.
