Milwaukee 2018 Market Summary

[Marcus Auerbach]

2018 was a great year for our rental portfolio and for the Milwaukee metro area in general. As I was updating my records and looking through market stats, I thought I should share some of the data.

Milwaukee County SINGLE FAMILY Market 2018 vs (2017):

Another strong year in the books: inventory shortage - again - defined the market dynamic, supply was down to only 2.14 months of inventory (2.91 in 2017) - as a reference: about 6 would be normal. Homes moved even faster with a median 22 Days on Market (35 in 2017) for a total of 8280 homes sold - basically flat to the previous year. Sold price to list price was on average over 98% and peaked in crazy June at almost 100%! Tough market for buyers - speed and clean offers were the keys to success.

Good news for owners. Median Sales Prices were up 6.61% over the previous year 2017 - from $152,000 to $162,050. Average sales prices were up 8.58% due to a shift in segments; sales in the sub-$100k category shrunk by over 22% as values are pushing up into higher segments; everything else has grown, in particular the segments 200-300k (nice homes, but affordable, flips) and over 500k (luxury).

Milwaukee County DUPLEX Market 2018 vs (2017):

Very similar picture, sales remained pretty stable at 1518 units (vs 1545), with inventory down to 3.56 months (vs 4.41) and also here shorter days on market: 27 (from 33). Median sales prices were up 6.88%. Interestingly, some investors are looking to cash out from cheaper properties and looking to upgrade - some are opportunistic and that is visible in the median increase of list price of 9.14% and a lower list to sales ratio of about 94%. The market is keeps accelerating, very evident in days on market trend:

General thoughts and my outlook for 2019:

Milwaukee has seen robust growth and lots of new developments, especially along the lake shore and in the suburbs. Prices have been growing steadily and modest at 5-7% over the last years and a lot of people start to wonder when the cycle will start to turn. Based on all the data I can see 2019 will be similar to 2018. Despite the increases we have seen, homes are still relatively cheap compared to their replacement cost in Milwaukee. The rental market has been growing robust as well and quality homes rent out quickly for top dollar. The luxury rental segment has seen a lot of new developments, often with rents close to or over $2,000 per month, but a little bit to my surprise demand has kept up with supply. Single family rental demand is higher than supply, evident by the PM's waiting lists. With low unemployment we have started to see wages go up a bit and I think inflation is going to be an increasing factor over the next years. Both should be beneficial to buy and hold investors. The challenge for flippers remains the acquisition side and finding qualified labor, selling is easy. New construction is not a factor within Milwaukee (only 18 units!), but we see about 400 new homes built in the suburbs, mostly between $400 and $600k and clearly out of reach for first and second time home buyers.

If you have any specific questions about the Milwaukee market, please post them here, I will try to find answers!