Slumping home sales, rising foreclosures and more short sales are holding back housing markets from entering a recovery in Wisconsin, despite healthier levels of unemployment in most of the state and near record low mortgage rates. Declining home prices are being driven by a lack of demand as consumers wait-out the real estate crash.
Sales of homes surged higher during the federal home buyer tax credit, but then like just about everywhere in the U.S. declined. Home sales and prices have been on a skid south ever since. Sales are expected to remain soft through 2011 in Milwaukee, the beer capital of the world sustaining the financial crisis, including restrictive mortgage lending and a shadow inventory of properties that will take more than two years to sell-off.
However, a positive sign has developed for the market. New home building permits are ahead of last year by 2%, showing a move in the right direction in Milwaukee as the state’s biggest city moves slowly like a brew master in the right direction. Home sales, however, are expected to remain sluggish for the year, and are forecast to see average home prices decline 4.2% in 2011.
South of Milwaukee just 30 miles, Racine is battling through the downturn with high unemployment as a result of plant closures, forcing its housing market into a slowdown. Racine home prices are forecast to dip an average of 5.1% this year.
Properties in distress are rising in Madison, the second largest urban center as homeowners who are unable to make mortgage payments try to negotiate with lenders. However, many aren’t finding help and are suffering through foreclosure crisis or short sales.
Better employment numbers should eventually translate into a healthier market for Madison coupled with near record low mortgage rates and the inventory of troubled properties will provide bargain priced homes that buyers are hunting for in the current marketplace. As a result of pressure from foreclosures, Madison is forecast to see average home prices decline 4.7% for the year.
The federal tax credit drove bargain hungry buyers out to purchase homes heavily in Green Bay, slashing the supply but when the incentive expired so did the larger volume of especially first time buyers. Green Bay is a target for investors with lower joblessness than many other areas providing a solid core of willing renters. Sales should see an improvement towards the summer months as deflation slows to a forecast 3.2% for the year.
But in Kenosha high unemployment in retail, construction and manufacturing trouble the local economy and pressures the housing market as buyers grow increasingly reluctant to make offers to purchase homes. The area has been hurt by the financial crisis and it is likely things won’t improve until more residents go back to work. Average home prices in Kenosha are forecast to drop an additional 4.1% in 2011.