The State of Madison’s Real Estate Market

By Katy Macek

With an increased demand in housing and continued low inventory, the ultra-competitive housing market in Dane County, and across the country, seems likely to stick around.

Realtors Lindsay Koch of Realty Executives and Erica Wiley of MHB Real Estate expect the sellers’ market to remain strong in 2022, though (hopefully) a little less hectic than the craziness of 2021.

Both saw buyers willing to offer more than the home’s listed price — sometimes as much as $100,000 over. It wasn’t uncommon for one home to have 20 to 30 offers, and waiving inspections and/or appraisals became less outside the norm.

Koch doesn’t think such “crazy, high numbers” will stick in 2022, but she thinks some trends will last longer.

“The weird thing is, asking price is now like the starting point,” she says. “You’re almost expected to come in over asking with your offer, and I think that’s going to continue.”

Koch says the median home price in Dane County is around $350,000, and she thinks it could climb above $400,000 in the next year.

“I don’t think that’ll be going backwards anytime soon, but I do think [prices will] start to level off in a couple years,” she says.

That can make it intimidating for first-time homebuyers, especially those looking for affordable housing, says Kathryne Auerback, executive director of Movin Out’, an organization that helps people with disabilities find housing.

She says the housing market has disproportionately affected marginalized communities, such as people with disabilities and Black and brown folks.

“Median sales prices are about $75,000 to $100,000 more than what’s considered affordable,” she says. “There are systemic, historic factors in place that make homeownership even more challenging for the people we serve.”

Interest rates are still very low, and though Wiley thinks they will eventually start rising, the market will remain strong.

BUY NOW!

Investing in a home can still be a smart choice, if you’re patient and prepared. Read on for tips to navigate a housing market that’s unlike anything experts have seen in recent memory.

START WITH RESEARCH

Kim Trainor, a senior loan officer with Prosperity Home Mortgage in Madison, says buyers should do everything they can up front to make the homebuying process as easy as possible.

While a 20% down payment is ideal, many first-time homebuyers can do as little as a 3% down payment (if they meet certain requirements), and even more programs are available depending on your credit score, income and the property’s location, Trainor says. (Nerdwallet says the average home down payment in 2021 was 7%).

Many financial institutions offer homebuying seminars, and online homebuyer programs are also available. The Wisconsin Housing and Economic Development (wheda.com) offers more resources.

Movin’ Out provides down-payment assistance programs for those who qualify for their programs, but Auerback says they provide housing information and referral services for free to anyone who contacts them.

BE CREATIVE, AND FLEXIBLE

High offers and waived inspections or appraisals may help offers stand out, but Koch urges clients to appeal to sellers without making risky decisions.

“There are ways to get creative, especially for first-time homebuyers to … feel a little bit more comfortable,” she says.

Auerback recommends being cautious and discussing decisions with your loved ones.

“Don’t rush into a situation where you end up in a house that needs a lot of work you wouldn’t be able to afford,” she says.

Koch also advises her clients to be flexible about their dream home. List your must-haves, and things that are negotiable.

“It’s about shifting your mindset,” she says. “Maybe this is just step one; maybe this [home] isn’t forever.”

HAVE CLEAR GOALS AND PATIENCE

Regardless, Koch suggests thinking about your long-term goals when purchasing a home, including how it could impact other life decisions, such as marriage or kids.

And searching for the right property takes time. Koch had one client looking for six months, and Wiley had another looking for more than a year.

Auerback says Movin’ Out’s clients are taking longer, especially because they may have to work with lenders with specific requirements.

“A seller may prefer an offer that doesn’t have steps required by our lenders,” she says. “We still are helping families reach closing and purchase new homes, it’s just taking longer to find something.”

But, that doesn’t mean it’s impossible. For those who aren’t willing to waive

inspections, have a set price point or want certain amenities, patience is key.

ENLIST YOUR A-TEAM

“Buying in general is a stressful process, but experience is super important in a competitive marketplace,” Wiley says. “You want [a real estate agent] who’s seen it all and knows what it takes, but can also protect your best interests.”

The best agents can also provide education on navigating the market, contracts, industry jargon and more.

When looking at homes, Koch suggests bringing a team of loved ones.

“Sometimes [you have] less than 24 hours to decide if you want to buy a home, or, you can only see it once and then have to decide,” she says. “Bring anyone and everyone that will make you really comfortable to pull the trigger.”

10 STEPS TO BUYING A HOME

1. Prepare your finances. Save for a down payment and improve or maintain your credit score.
2. Interview real estate agents to find one you connect with.
3. Interview lenders. Ask for recommendations from realtors, who are likely to have worked with several.
4. Get pre-approved for financing through your lender to determine a down payment, purchase price point and any homebuyer programs you qualify for.
5. Start looking for homes in your price range.
6. Make an offer.
7. Work with your lender
to get a home appraisal and the title work ordered.
8. Set up homeowner’s insurance.
9. Sign your final paperwork
to close on your home.
10. Get the keys and move in!

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