Crazy real estate market has buyers scrambling

Area real estate agents use one word to describe today’s market — crazy.

“It’s very much insanity right now,” Tom Didier of Re/Max United in Port Washington said. “I’ve seen plenty of buyers and sellers markets, but never where supply and demand are this out of whack, and I’ve been in this business 26 years.”

The market is so crazy that buyers need to be ready to make a decision on a moment’s notice, to bid more than the asking price — sometimes significantly more — and to waive contingencies, everything from home inspections to well and septic inspections to radon tests.

“After they lose out on a few homes, they’ll do that,” Barb Beattie of Beattie Janeshek Realty Group in Port said. 

“Buyers have to become very creative in their offers,” Didier added. “They have to make concessions, no appraisals, no inspections of any kind. 

“I know it sounds crazy, but I’ve never seen so many offers being written without a home inspection. When we do our home viewing, I tell buyers, this is your inspection so look very closely.”

Although the local market is crazy, housing across the country is tight. Didier noted that a recent survey found that there are fewer listings across the nation than there are real estate agents.

Since Jan. 1, he said, only 23 houses in Port Washington had been sold — “That’s horribly low” — an indication of how few houses are on the market. And of these sales, 16 houses sold for full price or more than the asking price.

And the Milwaukee area was recently named one of the top 10 most competitive real estate markets in the country in a survey by Lending Tree.

Beattie said she recently listed a house and within a few hours had 21 showings scheduled. Eight people bid on the house.

“It took 2-1/2 hours to present all the offers,” she said.

She recalled another house where the highest bid was $45,000 over list price — “and I thought we were priced a little high,” Beattie said.

The market’s so tight, Beattie said, that before she lists a house she will tell her buyers about it.

“Otherwise we have nothing for our buyers,” she said. 

Some buyers are making offers with accelerator clauses, agreeing to beat a top offer by a specified amount of money to a maximum they’ve set, Beattie added.

Didier said the average house is on the market for four days and said most buyers should receive at least two to five offers within the first day they list their house.

Last Monday, he said, he listed a house at 7 a.m. and by 6 p.m. Tuesday he had 10 offers.

“The worst offer was $5,000 over the asking price,” he said.

Scott Hollrith of Hollrith Realty in Grafton said prices are typically going for 20% to 25% more than normal.

“I’m seeing offers written up that are typically over asking, and there are 15 of them,” he said.

The reasons for the hot market are many, real estate agents said, and they include the Covid-19 pandemic, which has caused some city dwellers to seek homes in suburbs like those found in Ozaukee County.

“We’ve got interest rates that are unbelievably low,” Hollrith said. “And I think a lot of it is pent-up demand. People have been sitting inside their houses for a year. They’re working remotely, and they’re finding they need more space. They need a place that’s a little bit quieter, and they’ve got children who have been studying at home.”

Rick Schmit of Schmit Realty in Grafton noted many young people, in particular Millennials, want to buy a house instead of renting, which has also helped fuel the market.

One of the biggest factors is that there aren’t many homes on the market right now, Schmit said.

“There are very few homes available,” he said. “Port’s red hot, Saukville’s red hot. Grafton, too.”

Beattie concurred, noting that there were only four houses available in Port April 5, the day she was interviewed.

“The rest are all under contract,” she said.

In the past, hot markets have often struck at one end of the market, perhaps starter houses or luxury homes. Today, the real estate agents said, it’s across the board.

“The stuff over $500,000 may be a little slower,” Didier conceded.

While existing houses are at a premium, so, too, are new houses and lots, Beattie said.

“Many lots have been listed for years. Now they have offers,” she said.

“Builders can’t build fast enough,” Didier said.

But the cost of building materials has gone up significantly as well, bringing up these prices, they said.

Another factor driving up the prices is that people are making cash offers, Beattie said.

“Then you don’t need an appraisal,” she said. “People are investing in properties. And it becomes really competitive.”

The ever-increasing value of houses is sending prices sky high, Didier said. Houses valued at $250,000 last year are probably worth $300,000 today.

“Most homes are selling about 10% above what we consider market value,” he said. “Every day I get calls from people asking, how much is my house worth?’ People are intrigued.”

But then reality sets in, Didier said, and they realize they have to go somewhere, and to do that they will have to pay a premium.

Some people will take the risk, he said, selling their house and retiring, moving to another area, renting for the time being or staying with family and friends. 

As the weather gets nicer, Didier added, a few more houses are coming on the market.

“Hopefully that will give buyers more of an option,” he said. “It’s really frustrating right now.”

How long the hot market lasts is anyone’s guess, the real estate agents said.

“Until the backlog of buyers is gone,” Schmit said. “I think interest rates are going to stay about the same, and things will keep moving.”

“I don’t have a crystal ball,” Hollrith added. “I think we’re going to see it last at least until the end of the year, unless interest rates go up.”

While it’s hard to call potential buyers to tell them they lost out on a property, it’s great to tell someone they got the house of their dreams, Beattie said.

“Nothing is better than when you call someone and say, ‘You got the house,’” she said. “They’re ecstatic.”