Realtors cautiously optimistic for ‘14
Metro market started to cool in final quarter of 2013

By Kirsten Klahn - Special to the Enterprise

Jan. 10, 2014

A house for sale on Merton Avenue in Hartland.    
Charles Auer/Freeman Staff

OCONOMOWOC - Milwaukee-area real estate experts are guardedly optimistic about 2014.

Despite some uncertainty, they are excited about the prospects of continuing the housing market rebound that started in 2013.

Mike Ruzicka, president of the Greater Milwaukee Association of Realtors, said he is expecting 2014 to be a strong year for the housing market.

“The recession was like having the flu,” he said. “When it first started, we felt really bad. In 2012, we felt a little better, but we’d get off the couch and still feel woozy. In 2013, it was a good year in a lot of ways.”

Meaning, Ruzicka said, 2014 will continue to look positive for both buyers and sellers.

Through the first 11 months of 2013, sales were up 10.2 percent from the same period a year ago in the four-county metro area, which includes Milwaukee, Waukesha, Ozaukee and Washington counties, to 16,457 from 14,937, according to statistics from Metro MLS Inc.

There was also an increase in building permits in 2013. In the four-county metro Milwaukee area, 1,187 building permits were issued in the 11-month period, a 30 percent increase from 913 in the same span in 2012.

 

Various factors at work

Other real estate experts, however, are remaining cautious about the upcoming year.

“2014 will bring interesting challenges,” said David Clark, an economics professor at Marquette University.

Factors such as an increase in housing prices could affect the market in the upcoming year. An increase, Clark said, could start to price people out of the market. A bump in interest rates could also affect local home sales, he said, and market uncertainties could cause problems in 2014.

A big uncertainty involves the government shutdown, Clark said.

“Those things kind of rattle buyers from buying big-ticket items,” Clark said. “Even though it was relatively short-lived, it probably still had a minor impact in 2013’s fourth quarter.”

And Clark said, the Affordable Care Act could also cause issues for potential homebuyers.

“I don’t think anyone really knows how the Affordable Care Act will affect the market,” he said. “If the prices for insurance are a big sticker shock, it could keep some people from entering the market. Homeowners who have to pay several hundred more dollars for insurance are now in a situation where they can’t qualify for a mortgage.”

“This uncertainty is plaguing the market,” Clark added. “The next couple of months will be telling.”

Even the most optimistic real estate agents are waiting on a few other uncertainties. One factor, Ruzicka said, is waiting for certain elements of the Dodd-Frank Bill to be implemented, which will affect the amount homeowners need to have for a down payment on a home.

And, recent statistics show the housing market is starting to slow down.

Clark said the real estate market started to cool in October, with sales of existing homes nearly identical to the same month in 2012. October sales were just 0.1 percent lower than last October, representing the first time since July 2011 that monthly sales did not increase over the previous year.

The October report also showed home sales were softening throughout Wisconsin. The southeast region was nearly unchanged, with sales rising 0.6 percent.

Ruzicka said he hopes to see an increase in listings on the market in the upcoming year. Last year saw some tight inventory, he said, causing buyers to take more time choosing a home.

Overall, Ruzicka said, 2014 should bring good news for both buyers and sellers.

“It’s pretty even,” he said, “but I’d say it’s slightly in favor of sellers just because inventory is still tight. The industry is very optimistic about 2014.”