As we enter 2025, Wisconsin’s housing market is positioned for continued growth and evolution. While national trends, particularly in Florida, Arizona and Nevada, likely start to show weakness by summer, the Greater Milwaukee area is likely to remain resilient for several reasons.
- Employment Opportunities
- Entertainment and Recreation lifestyle
- Educational opportunities
- Cost of living advantage to large metros
- Climate resiliency
- Slightly rising population for first time in decades
- Sellers slow to emerge due to low mortgage rates on existing homes
- Constrained new home builds
In 2025, we do not expect mortgage rates to come down much and there is potential for some shaking out in the market in the second half of the year – similar to 2024. Overall, we expect about 10% home appreciation in the first half, but a roughly flat second half as the economy transitions to a new Federal fiscal and economic regime.
Home buyers and sellers can use emerging information to build your strategy for buying and/or selling a home. Ultimately, we believe that Great Lakes real estate in general, and Great Milwaukee in particular, are attractive long-term investments. That said, economic conditions, supply/demand dynamics and mortgage rates are fluid, so, we must adjust as appropriate.
“When the facts change, I change my mind.” – John Maynard Keynes
Greater Milwaukee Homes For Sale
Our home price forecasts are aggregate in nature and will certainly be different from neighborhood to neighborhood. Broadly speaking, “location, location, location” still holds. Areas with better access to employment, entertainment, education and transportation will tend to be strongest for home prices.
According to the Great Milwaukee Association Of Realtors, 2024 home sales only exceeded 2023 sales by 472 homes at 17,058 total sales. This is below the roughly 20,000 sales considered to be “normal” and “healthy” homes market. The low sales numbers are likely tied to higher mortgage rates that took hold in the second half of 2022.
The Greater Milwaukee home inventory levels of homes for sale have hovered in the 2-3 month range versus a more normal 4-6 month range. With only 3210 listings recently, the market is undersupplied. To reach a 6-month inventory and a roughly balanced market would take about double the listings.
The dearth of home sellers, which was covered extensively by the Wall Street Journal, is a glut of potential home sellers who are “locked into” their mortgages. These potential sellers are in their current homes at lower loan principal amount and lower interest rates. It takes significant life circumstances to motivate them to move.
With the low level of homes for sale, even a slight uptick could help the market loosen up. As it stands, most homes for sale are on the market only about a month. This makes for a very competitive buying situation, that is, it’s a seller’s market for now.
New Home Builds Stuck
In addition to fewer existing homes being for sale, new home completions are also relatively low. This is due to higher interest rates, less developable land than the past and a shortage of skilled workers. So, while there is some buildable land, affordable financing and labor are difficult to secure.
Like the multiyear wave of cash home purchases, many by investors, many new builds are also being done by those who have the cash to pay for much of the build in real time and who already own the land. That is the not the perfect equation for building a new subdivision.
A downtick in rates of about 1-2% in rates for building loans and mortgages could unstick some subdivision projects that have been hoping to get started surrounding Milwaukee. This is a complex equation though.
The Federal Reserve lowering rates could stimulate apartment building as those use a building loan and a 5-year note for financing. Longer term mortgages, i.e. the 30-year, require the “long-end” of the yield curve to come down and that requires a more balanced Federal budget (unlikely) or a recession (which none of us want).
Even if financing loosens up, finding labor to keep up with demand is unlikely. Here’s where we suggest you tell your teens and 20-somethings that there’s good work in the skilled trades.
This is also where we both warn sellers, as well as, let potential builders and buyers about opportunity of a recession. It is our belief, based on economic cycles more than anything (let’s leave politics out of this) that a recession is quite possible in the next year or two.
For sellers, a coming recession means it’s likely better to sell sooner than later – we can help you sell your home. For those who want to build, it means secure your land – we can help you buy land. For hopeful buyers who are patient, it means build up your cash so you can buy when prices soften and inventory increases – contact us ahead of time to start planning a tactical buying strategy.
Contact Wisconsin Haven Realty
Greater Milwaukee Home Price Forecast
Due to tight home supply, we forecast average home prices will rise from January’s average home price of approximately $427,000 to about $470,000 by mid-year — a potential 10% appreciation. Median’s are lower which represents the skew created by higher priced luxury homes versus the market which includes lower priced neighborhoods.
While mortgage rates are expected to stabilize in the 6.5-7% range and inventory should show modest improvements, the market will likely remain firmly in seller’s territory across Greater Milwaukee until around mid-year. Wisconsin is emerging as one of the nation’s stronger performing housing markets, driven by persistent supply constraints, steady job growth, and continued in-migration from higher-cost markets.
After midyear, the outlook is less clear. As mentioned above, a softening economy could loosen up inventory, particularly if some homeowners lose jobs (which is unfortunate) or Baby Boomers age out of their current homes (which is inevitable).
Again, our thought is that for sellers, it’s likely better to sell sooner than later. For those who want to build, it means buy your land sometime this year. For hopeful buyers who are patient, it means build up your cash so you can buy when prices soften and inventory increases.
Contact Wisconsin Haven Realty
Home Affordability & Demographics
Normally, home affordability is a cyclical issue that resolves itself every few years. Today, post Covid, there are factors that are creating persistently higher home prices.
What we know is that home ownership has become tougher in recent years after loosening up for a year during Covid’s work-from-home shift and a period of record low interest rates. After several years of home appreciation due to the tighter home market dynamics (covered above), and low wage gains, starter and middle market homes are out of reach for many, to say nothing of the luxury market.
The most pressing issue in home affordability is demographics. This is a slow moving piece of the equation.
Baby Boomers, until recently the largest generation, own the most homes. Until they are physically required to move, or for some other reason choose to move, there is a large swath of homes that simply will not come to market soon.
Not only do most Boomers not want to move for personal reasons, many cannot afford to leave the homes that they spent years paying off the mortgage or have a low rate mortgage on. Yes, there will be some downsizing, but those folks sell one home and buy a cheaper one, that’s not really opening up the market.
Ultimately, Boomers need places to live, and it’s a matter of both desired lifestyle, as well as, finance. Over the next decade, Boomers will slowly begin to sell more homes. However, we don’t see many homeowners moving to apartment communities before being widowed or partially disabled. Some of these things are not nice to think about, but, it is a major part of what is coming, albeit, slowly.
While there is some generational angst, with rhetoric about the Federal Reserve, government and other issues bandied about, we see what is going on as a secular trend. We should understand things as aging demographics to be tactically adjusted to based on each home buyer’s and seller’s situation.
Closing Thoughts On The 2025 Milwaukee Area Home Market
The housing market in Greater Milwaukee remains tight going into 2025. This is good for sellers who are benefiting from demand that exceeds supply. The seller’s edge will eventually change as cyclical economics and slow moving secular trends continue to evolve.
If mortgage rates come down, which many hope for, that is a double edged sword, as it likely pushes home prices up. So, despite lower rates, affordability might not change much. What the Milwaukee area housing market needs for better affordability is more housing supply and higher wages. We could achieve both things if there were more home building, so it pays to watch financial factors that affect the home building market.
So, we reiterate, for sellers, it’s likely better to sell sooner than later – we can help you sell your home. For those who want to build, it means secure your land – we can help you buy land. For hopeful buyers who are patient, it means build up your cash so you can buy when prices soften and inventory increases – contact us ahead of time to start planning a tactical buying strategy.
Contact Wisconsin Haven Realty