Wisconsin’s home sales market is red hot. Buyers scramble to outbid each other, offer $20,000 over asking price, scrap inspections – Milwaukee Journal Sentinel

Alexa and Jeff Schmitz recently sold a house on the west side of Milwaukee and then bought a "forever home" in Caledonia. The house they sold received about two dozen offers and went for about $20,000 over asking price. Jeff bought the three-bedroom house in 2012 for $115,000. He made modest updates like upgrading the fence, replacing the water heater and air conditioning. It sold for $190,000. They bought a newly built home in Caledonia with five bedrooms and 2 1/2 bathrooms for $359,000.

Alexa and Jeff Schmitz knew the real estate market was moving fast. 

They didn’t realize just how fast until they decided to sell their three-bedroom Milwaukee house to buy a “forever home.”

Their house was open for showings for a single weekend. 

The house was shown more than 50 times over three days. By Monday, the Schmitzes had 24 offers. 

“It blows my mind,” Jeff Schmitz said.

Wisconsin’s housing market is hot with prices increasing around 10% over the last year. The number of days a property is on the market has dropped. The number of offers a buyer makes before getting a home has increased. 

What the Schmitzes experienced isn’t unusual and it has led to a scramble on the part of buyers, sellers and agents.

Schmitz paid roughly $115,000 for the ranch-style home with a fenced-in yard and detached garage on the western edge of Milwaukee in 2012. He didn’t put a lot of money into the house. He upgraded the fence, replaced the water heater and air conditioning. 

Alexa and Jeff Schmitz recently sold this house on the west side of Milwaukee on S. 63rd Street for about $190,000 - $20,000 over the asking price. The couple received about two dozen offers. Jeff bought the three-bedroom house in 2012 for $115,000.

He thought maybe the property would sell for $150,000 — it’s a seller’s market, after all. They listed the home at the end of February for $169,900 with guidance from their Realtor. 

As the offers rolled in, would-be buyers tried to stand out. Some offered to speed the sale by waiving a home inspection or appraisal, another said they would cover up to $5,000 if the inspection showed a need for repairs. One offer was over $200,000. 

“I was a little in shock,” Jeff Schmitz said. 

The house sold for about $20,000 over asking with no home inspection and no appraisal contingency. 

“I loved our little house,” Alexa Schmitz said. “But I couldn’t believe that someone would buy our home without an inspection. It was built in like the 1950s. From a sellers standpoint, we were over the moon.”

The Schmitz realtor, Beth Jaworski, said the competitiveness driving up prices is unsustainable. At the beginning of the year, she would write offers around 105% of the asking price. Recently, she’s seeing that the winning bids are around 115% of the asking price. 

“It hasn’t mattered what is on the market — it’s selling,” she said. 

Alexa and Jeff Schmitz recently sold a house on the western edge of Milwaukee and then bought a "forever home" in Caledonia.

Home prices up 10.3% statewide

Charese Gardner, the CEO and broker of Gardner & Associates, recently sat down and talked strategy with the seven agents who work for the firm. 

“They’re frustrated because every time they put an offer on a house, it’s outbid,” Gardner said. Gardner & Associates mostly buys and sells homes in the city of Milwaukee. Across the county, the average home price is up 8.6% in the last year to $220,351, according to data from the Greater Milwaukee Association of Realtors

She told the agents they need to show buyers homes listed at least $10,000 to $20,000 under their budget so that they can make a competitive bid. 

“You have to make your offer look like gold,” Gardner said. 

The average price of a home in Wisconsin is up 10.3% to $229,900 in the last 12 months, according to an analysis by the Wisconsin Realtors Association. Real estate prices are being pushed up by a lack of inventory. Total listings of homes in Wisconsin fell 36.9% in the last year, according to WRA. 

The state has never had this tight of a market heading into the busy summer season, the association said. 

The Milwaukee metro area had the most sales in the first three months of 2020 since the realtor’s association began tracking. At the same time, the fewest new listings came onto the market in the same time. 

The entire state is classified as a “strong seller’s market.” 

Strong demand and limited supply is running up prices everywhere. 

Demand even higher in other parts of the country

Wisconsin home prices aren’t rising as fast as in other parts of the country. The median home price in the United States is up 17.2% to $329,100 from a year earlier, according to the National Association of Realtors.

“It’s the kind of market you like to see,” said Robert Rauland, the president of The Rauland Agency that works mainly in Walworth County. Rauland said he typically expects to turn around a well-priced house in about three months. Lately, properties are lasting just days on the market. 

“If we can list the property, it could be gone the same day,” Rauland said. 

The increasing prices have been offset with historically low interest rates for mortgages. But, in the last few months, mortgage rates have increased to just more than 3%. 

This is the strongest sustained growth in prices that Dave Clark has seen since he started tracking data for the Wisconsin Realtors Association more than a decade ago. Clark is the executive associate dean in the College of Business Administration at Marquette University. 

“Are prices growing at rates that can’t be sustained? Yes,” Clark said. “The increases won’t be sustained. The growth will moderate, but I’m not anticipating a drop or correction.” 

He expects the recent uptick in mortgage rates will dampen demand. 

While most sales are existing homes, construction of new homes is also experiencing an inventory pinch.

Paul Bielinkski, CEO of Bielinski Homes, said he’s expecting to sell twice as many homes in 2021 as the company did in 2020. Bielinkski Homes closed on around 150 homes last year in nine counties across southeastern Wisconsin. Bielinkski is projecting the company will sell 300 in 2021 based on strong sales in the first three months of the year. 

“Anything that’s standing and completed has an offer on it,” Bielinski said. This is still nowhere near the company’s peak in around 2005 when Bielinski closed on around 500 homes a year. 

Finding a ‘forever home’

Alexa and Jeff Schmitz started to look for their ‘forever home’ last fall — a few months before they would put their Milwaukee home on the market.

Every single time the couple liked a property and called their realtor, the home would already have an accepted offer on it. 

The couple felt like they were in a strong position to buy as long as they could act quick. 

Alexa, a nurse, had sold her home and moved in with Jeff in 2019. Cash from that sale helped the couple make an offer on their new house without having a contingency about Jeff’s house selling. 

The Schmitzes walked through an under-construction, five-bedroom house in Caledonia in December. The outside was pretty much complete, but the inside was just drywall and plywood flooring. The house met the checklist — an open concept with a huge kitchen, a master suite with a walk-in closet and laundry upstairs. 

“We took a leap of faith and put in an offer,” Jeff Schmitz said. 

They offered the home’s asking price — $359,000 — without contingencies for an inspection. It was accepted. They closed in March with about a 2% interest rate on a 30-year fixed mortgage. 

“If we wouldn’t have stumbled into this house, we would still be looking,” Alexa Schmitz said.

Sarah Hauer can be reached at shauer@journalsentinel.com or on Instagram @HauerSarah and Twitter @SarahHauer. Subscribe to her weekly newsletter Be MKE at jsonline.com/bemke

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