Paul Gores

Milwaukee Journal Sentinel

On a recent Friday, Shorewest Realtor Beth Jaworski listed a three-bedroom, 1½-bathroom Dutch colonial house with a single-car garage in a popular Wauwatosa neighborhood for $289,900.

By Sunday night that same weekend, the house had five offers from buyers. It sold for $315,000.

“I’ve never seen it quite like this,” said Jaworski, who has been selling residential real estate for almost 25 years. “You can put a property on the market, and literally within hours, you’ll have 15 to 25 showings scheduled.”

That seller's market deal in Wauwatosa — and many others like it — shows how hot the metro Milwaukee climate for existing home sales has become.

But it also helps illustrate a dilemma that buyers and real estate agents face just as the housing market moves into its peak season: Homes for sale are in short supply.

“It’s definitely a starving market, meaning that there’s so little inventory,” said Bob Larson, a broker and manager with First Weber Realtors. “I’ve been in the business quite some time and I’ve seen a lot of buyer’s markets and I’ve seen seller’s markets. I’ve never seen one quite like this.”

In February, the inventory of homes listed for sale in the metro area was down almost 1% from a year ago. That may seem small, but it's compared with already thin inventory in 2016 and comes at a time when more people want to buy.

Statewide through the first two months of this year, new listings of homes for sale were 9.1% lower than at the same time in 2016, according to the Wisconsin Realtors Association.

“Inventory is tight – probably the tightest I’ve ever seen it,” said Pete Stefaniak of The Stefaniak Group, noting he has been selling homes nearly 40 years. “I don’t ever recall inventory being this shallow.”

Anecdotally, Stefaniak said, in his primary market area of Muskego, there are fewer than a fourth of the number of single-family homes for sale now than on average in 2011, and about half of the current listings have “accepted offers.”

With would-be homeowners out of proportion with people who want to sell, prices are rising, and overbids on the best properties are no longer rare. In Wisconsin, the median price of homes sold during the first two months of 2017 was $155,950, or 6.1% more than $147,000 in the January-February period of 2016.

The uptick in prices, along with the expectation of mortgage interest rates finally moving up after years near historic lows, has prompted even more potential buyers into the market to chase the limited inventory of properties. Realtors say the supply of homes for sale in the $300,000 and less range is particularly inadequate.

Real estate economist David Clark, who can measure housing data every which way, doesn’t need to crunch any numbers to see that the market could use more properties for sale. All he has to do is look around the Waukesha County community where he lives.

“Quite frankly, I hardly see any (for sale) signs at all,” said Clark, who is executive associate dean of Marquette University’s business school.

Clark does crunch numbers. He predicts that more houses will come onto the market this spring and summer, as they traditionally do. Still, the recent pattern has been for new listings to lag listings in the same months the previous year.

“The only question is, ‘Will they finally start trending up?’” Clark said.

Real estate experts cite a number of reasons for the limited listings of homes for sale.

Mike Ruzicka, president of the Greater Milwaukee Association of Realtors, said people have held off putting their homes on the market since the housing crash. They’ve waited for the value of their property to get back, or at least close, to what it once was. He is optimistic the price increases lately will prompt more to sell, offering some relief to the tight market.

“Prices have gone up to the point where a lot of people who have considered selling are going to say, ‘OK, now it’s time to sell because prices have gone up 5% to 7% over last year,’” Ruzicka said.

But Larson indicated a market like the current one has its own self-stifling characteristics. Some homeowners are afraid if they put their house on the market and sell it quickly, they’ll be left in a bind.

“Because of the inventory being so low, sellers are hesitant to sell their homes because they can’t find a place to purchase,” Larson said. “I think that’s what’s holding the inventory back.”

Larson said the dearth of inventory also leads to an increase in word-of-mouth sales conducted directly by homeowners.

"Properties end up being sold before they are even available to a majority of buyers," he said.

Clark said that since the Great Recession and housing crash, some homeowners, rather than sell, have made modifications to their homes and opted to “age in place" longer.

In addition, construction of new homes, while picking up over the last couple of years, still is far off the pace of home building in the early and mid-2000s, contributing to today’s relative lack of inventory.

Real estate professionals say the market needs more condominiums — not just single-family houses — for sale. “No question about it,” Stefaniak said.

With such a lean inventory, buyers need to be prepared to move quickly if they like a house.

“Any agent worthy of their license shouldn’t be showing a property to a buyer who doesn’t have their ducks in a row and doesn’t have a pre-approval letter from a lender,” Larson said.

Someone who’s in the market to buy “can’t take a day off” from the search, especially in the most sought-after locations, Clark said.

“If you think you’ve got the luxury of thinking about it for a while and then going back and looking at it for a second time or third time and then getting around to putting in an offer a week or so later, in a lot of these areas they just don’t last that long,” Clark said.

Said Jaworski, “Within 24 to 48 hours a lot of properties are sold.”

It’s such a seller’s market that even homes with issues that normally might turn off some buyers have a better chance of being sold, Jaworski said.

“If you have any kind of challenge with your property — busy street, odd floor plan, hadn’t been able to sell it three years ago — now is the time,” she said.

Jaworski added: “There is so much pent-up demand — so many people who waited and now realize if they keep waiting the prices continue to go up and interest rates continue to go up.”