Forward Janesville - TheReport - Third Quarter 2021

The market today is like nothing I have seen in my 25 years of real estate practice. It is anything but normal. We are in the middle of the perfect storm: a great time to sell, but a tough time to buy. In June, before I gave my talk to Forward Janesville, I did a search for active single-family homes in Janesville and Rock County. Rock County had 122 active single-family homes for sale, with an average list price of $311,000; of those listed, only 39 were in Janesville and the average list price was $295,000. If we look back just a decade ago, the average sales price for a single-family home in Janesville was $99,241. Today the average sales price is $211, 589 which is an increase of 113% in only ten years. What’s fueling this hot real estate market? The root of this boom is simple: there are too few homes. A “normal” real estate market in Janesville would consist of a three- to six-month inventory of 200 to 500 homes for sale. Today, we have less than a two- month inventory of homes. For the first five months of 2021, homes were on the market an average of 20 days compared to 103 days during the downturn of 2008. Economists are confident though that while trends look similar to the mid-2000 bubble, it is a nationwide supply shortage driving the prices higher, not risky lending practices. Today’s lending seems to be fundamentally sound. Interest rates below 3% are also adding fuel to the fire. These historic low interest rates have kept Janesville and Wisconsin overall housing affordable, even though the average prices have increased. Although, there is a shortage of homes in the area, there is not a shortage of REALTORS. As a matter of fact, there are more realtors than listings. In April 2021 there were 1.16 million homes on the market in the United States and 1.48 million realtors trying to sell them, according to data from National Association of Realtors. Closer to home, Rock County had 121 active single-family homes for sale, with only 39 in Janesville and 256 agents in Rock/Green MLS. With more agents competing for fewer sales, the negotiations are very competitive. Historically an offer would come in, usually under the asking price. This was typically followed by counteroffers, or even multiple counteroffers, back and forth. If the sellers were lucky, they would receive two or three offers on their property. Now, the list price seems more of a starting point. Sellers are allowing showings for four to seven days and are reviewing as many as five or more offers at the end of the showing period. Counteroffers and multiple counters are more uncommon. They are picking the highest and the best offers, and passing over the offers with home inspections and other contingencies. With less inventory and an abundance of buyers, homes in the area are selling anywhere from $5,000 to $35,000 over asking price. Multi-family units are being bought up as quickly as single-family homes. They are also following suit, going for well over the asking price. At R.K. Smith Realty, we manage over 1,150 units in the Janesville, Edgerton, and Milton markets. If you go to our website to look for a rental, depending on the time of the month, you will find fewer than nine units, or less than a 1% vacancy rate. This low vacancy rate is great for our investors but not for our economy. It has been a struggle helping people who wish to relocate to Rock County find housing. Rents are steadily increasing, and the rental market is as competitive, if not more competitive, than the single-family sales. If rates and unemployment stay low, and inflation stays in check, there is no end in sight. We need more resale inventory, new homes, and rentals, so we can continue to serve our growing community. REAL ESTATE MARKET WATCH Is the Insanity Coming to an End? 6 • W W W . F O R W A R D J A N E S V I L L E . C O M Across the nation, the real estate market has been hot, hot, hot. Rock County is no exception. Low interest rates, greater demand than supply, and a significant population that post-pandemic quarantine are seeking out smaller markets with bigger square footage properties over city dwellings has created the perfect storm. Will this trend continue and, if so, for how long? We asked three resident experts who kindly hosted a Forward Janesville real estate phone-in listening session for members earlier this year* to update us on the latest. * Visit https://youtu.be/mOq6vvPTwK8 to listen to that broadcast. Low Inventory and Interest Rates continue to Drive Market By Paul Schieldt, Broker/Owner • Coldwell Banker The Realty Group and RK Smith Realty