Wisconsin Real Estate and Trends in the New Normal
The outbreak of COVID-19 in 2020 changed lives and economies in ways no one was prepared for. Businesses across the US reeled, halting development plans and upending operations that relied on global supply chains, local skill, and personal customer interactions to keep things going. The result: high unemployment and loss of income. In fact, reports from the US Congressional Research Service in November 2020 showed that almost half of all American households had suffered from unemployment since March of 2020.
In spite of this, the real estate industry continued to soar, at least in the residential housing market. Here’s how real estate adapted to the pandemic.
CONTENT AT A GLANCE
- Effects of the pandemic on the real estate industry
- Real estate trends in the new normal
- Need for safer showings
- Necessity of technology
- Residential housing boom
- Shift to the suburbs
- Flexible workspaces
- Expansion of e-commerce
- Wisconsin real estate in the new normal
- Commercial real estate
- Strong housing market
- Best time to buy a home
- Why move to Wisconsin
- Contact the expert in Wisconsin real estate
Effects of the pandemic on the real estate industry
While the COVID-19 pandemic ravaged much of the economy, the real estate industry seemed to have bucked the downward trend – even if, at the beginning, it was just as shaken as a wide swath of sectors.
Home sales initially plummeted in April and May of 2020 when the world began shutting down. Fear and uncertainty about the future led homeowners to hunker down, refusing to sell their houses or invest in properties. However, in the summer of 2020, sales soared back up and peaked in October.
Commercial real estate, on the other hand, wasn’t as fortunate. The retail sector was dealt a hard blow as the first wave of the pandemic saw over 90% of non-essential establishments and services closing shop. Stores, restaurants, bars, and other service-oriented businesses bailed out as customers stayed away and social distancing measures were put in place.
Travel ground to a halt, resulting in increased vacancies in hotels, motels, inns, home rentals, and other lodging. Entertainment venues such as theaters and bars, as well as sports stadiums, closed their doors, at least temporarily. In short, businesses and services requiring the physical presence of the customer suffered the most.
Office buildings were another class of commercial real estate that was hard hit. Work-from-home arrangements left millions of square feet of office space unoccupied. Even today, with employees choosing to work remotely, the traditional office is in danger of losing its relevance as we continue to live in the midst of a globally uncontained pandemic.
Real estate trends in the new normal
As the world adjusts to a new way of doing things, real estate has been forced to follow suit. Some trends that have surfaced are expected to be quick fixes, while others may be here to stay.
- The need for safer showings
When real estate transactions dwindled at the onset of the pandemic, buyers and sellers were wracked with uncertainty. Should sellers allow potential buyers into their homes and risk the health repercussions? Should owners sell their homes if they can’t check out other properties they hope to move to?
But the real estate industry quickly found workarounds to remain in business. Realty firms put measures in place to ensure safer showings and booked house tours by appointment. Face masks, temperature checks, and hand sanitizers became the norm for potential buyers seeking to look at a home. Some agents even provided their own supplies as part of their marketing campaign. The number of people allowed inside a property at any given time was limited and different groups were kept apart when touring the same home.
- The necessity of technology
In cases where face-to-face contact was not possible, technology became a necessary part of the closing process. Digital communication tools such as Zoom, FaceTime, and Facebook Live were used in tours, inspections, appraisals, and even contract signing. Virtual activities minimized the need for in-person contact. Remote online notarizations (RON) allowed legal documents to be signed digitally. The increase in RON-assisted closings reached 200% for some companies.
The pandemic speeded the integration of technology in other aspects of the real estate industry. Contactless solutions may become an integral feature in new office buildings, including keyless entry and 3D tours.
- Residential housing boom
In late 2020, the interest in single-family homes peaked as remote work became the norm for many. With dwellings now doubling as workplaces, the idea of buying a home for the first time or moving to a more spacious house looked increasingly like a worthy investment. More than ever, the home became more than just a place to live; it also served as an office, a place for remote learning, and held the potential to adapt to the owner’s growing needs.
Moreover, interest rates fell to an all-time low, making it a good time to get a mortgage. These factors drove the demand for single-family homes.
The demand had its drawbacks, however. Owners looking to sell were reluctant to offload their homes only to find themselves unable to move to a new one because of the housing shortage. Thus, many homeowners chose to hold off on listing their properties. This trend exacerbated the shrinking inventory, which is anticipated to last beyond 2021.
The high demand and low supply resulted in sellers being king. Home prices skyrocketed. Sellers were besieged by multiple offers with buyers waiving contingencies and forgoing inspections just to close on a home. Days on Market (DOM) dropped. And sellers were on the receiving end of this bonanza.
- Shift to the suburbs
As employees continue to work remotely, the need for workplace proximity was no longer a factor in the search for homes. In fact, urbanites were keen to escape their densely populated environment by relocating to the suburbs. Their search meant living in a safer place, pursuing a more affordable lifestyle, and enjoying a better quality of life.
In addition, millennials were now starting families and looking for a bigger home to live. Their focus shifted – where once they enjoyed the perks of an urban lifestyle, now they were keener on becoming family-oriented by finding a place with a lower cost of living and with good schools.
Although remote work has made the move outside the city possible, it has also given rise to a greater demand for office spaces in suburban areas. Moreover, experts predict an increase in demand for mixed-use real estate in the suburbs featuring amenities typical in big cities such as shopping centers, restaurants, bars, salons, and other services.
- Flexible workspaces
COVID-19 may have permanently changed the way both companies and employees approach work. Even before commercial offices closed and working from home became the norm, people were already doing parts of their jobs at home, or wherever they were before the pandemic. Work emails, for example, or certain reports were sent or drafted outside the office on a regular basis.
Today, hybrid work is being touted as the bridge that will allow employees to be physically present in the office while satisfying the growing preference to work from home. This hybrid arrangement is still in its infancy and time will tell if it works.
Flexible or coworking office spaces are another route companies are exploring to boost productivity. Coworking spaces were already an option pre-pandemic, but it may play a bigger role in keeping commercial real estate afloat in the new normal and beyond.
- Expansion of e-commerce
While lockdowns have been lifted and establishments reopen, the threat of outbreaks remains ever present. Thus, e-commerce will continue to expand. Online shopping now accounts for 15% of total retail sales, but it is predicted to increase to 25% in the next five years. This bodes well for industrial real estate as the demand for warehousing solutions follows suit.
Though it is unlikely that retail real estate will totally die out, changes are expected as retailers begin to share spaces, brand partnerships arise, and current layouts reconfigured to suit future usage.
Wisconsin real estate in the new normal
Real estate in Wisconsin has been following the same trends across the United States.
- Commercial real estate in Wisconsin
Wisconsin commercial real estate is seeing mixed effects, with the industrial sector and multifamily housing faring well while retail and lodging struggle. Many hotels across the state have closed down completely. Others are trying to stay afloat by keeping their doors open to minimal occupancy.
The early months of the pandemic saw the decline of retail rent collections, which plunged to 44% in April 2020 from 81% the previous month. The effects can be seen in malls housing these shops.
Meanwhile, even as construction has been classified as an essential business, the uncertainty of the pandemic is expected to result in a slowdown in housing construction.
- Housing market in Wisconsin
In Wisconsin, residential real estate remains strong. Before the pandemic, the state enjoyed a 12.2% sales price appreciation in March 2020. Moreover, data shows that the median price of homes reached a record high of $207,500.
While Wisconsin was as hard hit as the rest of the US and unemployment rose, the housing market continues to flourish as the demand for more spacious homes increase.
Contributing to the boom are the record-low interest rates, down to less than 3% for a 30-year fixed-rate mortgage in 2020. Millennials in Wisconsin have also started investing in their first homes, further fuelling demand.
On the other hand, inventory in Wisconsin dropped nearly 37% 36.9% in the last 12 months, causing home prices to go up. According to the Wisconsin Realtors Association (WRA), the state’s average home price increased 10.3% to $229,000 from April 2020 to April 2021.
Still, it’s faster to sell a home now than it was before the pandemic. Sellers now face the happy predicament of weighing multiple offers from potential buyers. Homeowners are now selling above their asking price.
The WRA’s 2020 year-end report revealed that 88,685 homes were sold during the year, the highest on record using the association’s current system of sales reports. That’s a 7.3% increase compared to sales in 2019.
The strong demand for homes in Wisconsin is predicted to continue throughout 2021 and prices are likely to remain high.
- Best time to buy a home
The real estate market is constantly changing. Knowing the right time to buy can help you make the most of your future investment. Doing a little digging can help you decide if it’s a good time to buy property.
The current low mortgage rates might tempt you into investing in a house in Wisconsin. If you want to know the best time of the year to invest, you have to first figure out what your priorities are.
- If you are after lower listing prices, January is the best time to make a purchase. Based on data from October 2020, prices were 6.5% lower than average.
- January is also a good time to invest in a home. Inventory was 11% higher at that time in 2020.
- If low mortgage rates motivate you, December is a good month to buy. Data in 2020 revealed an average of 2.97% interest on a 30-year mortgage.
- In general, winter is a good time to search for a home. The weather conditions make it more troublesome to attend open houses, prompting many sellers to lower their prices as the demand wanes.
Why move to Wisconsin
There are many reasons why you should consider moving to Wisconsin. Many of its cities are regarded as some of the best places to live in the US. The cost of living is smaller, crime rates are low, and commute times are shorter.
In fact, Wisconsin ranks sixth in personal finance website WalletHub’s 2020 report on the best states to live in. It also ranked eighth for quality of life, ninth for safety, and tenth for education and health. Wisconsin also ranks 16th when it comes to the most affordable housing in the US, according to Roofstock.
On top of that, you can look forward to enjoying all four seasons in the Badger State. A wealth of year-round outdoor activities allows you to make the most of each season – from mountain biking and whitewater rafting to cross-country skiing and snow tubing. Wisconsin also offers a host of seasonal events to look forward to, including the Bayfield Apple Festival held in October, hailed by Wisconsin Trails magazine as one of Wisconsin’s best festivals.
Here are some of the top places in Wisconsin that you might want to call home.
Known as the Berry Capital of Wisconsin, Bayfield has been cited by USA Today as one of the Best Coastal Towns. It’s ideal for its suburban vibe, but with many of the perks associated with big city living. You’ll find galleries and shops in its historic downtown, with a wide choice of outdoor activities like kayaking or cruising to the Apostle Islands National Lakeshore just less than half a mile away. View properties for sale in Bayfield, WI.
Make sure to consider Washburn if you love fishing. Located on the shore of Chequamegon Bay, an inlet of Lake Superior, the city has Class A trout streams, as well as a marina, sand beaches, two lakeside campgrounds, and miles of hiking trails. It is the perfect home for anyone who wants to live closer to nature. View properties for sale in Washburn, WI.
If you enjoy small-town living, Cornucopia is the place for you. This quaint village can be found on the south shore of Lake Superior. It is the western gateway to the Apostle Islands National Lakeshore. There’s an array of water-related activities you can enjoy in Cornucopia such as kayaking, paddleboarding, canoeing and fishing. View properties for sale in Cornucopia, WI.
Contact the expert in Wisconsin real estate
The key to getting the best deal out of your investment is to hire a real estate expert in Wisconsin. Good agents help you find the right home at the right time and guide you throughout the process of purchasing a home.
Led by owner Jenna Galegher, the expert team of real estate agents at Windseeker Realty is committed to fulfilling your real estate needs. With our extensive experience and local knowledge, we can help you find what you need in Wisconsin’s beautiful Bayfield Peninsula.
Here’s what one happy client had to say about working with us:
“It has been a pleasure working with Jenna. This was our first realty experience, and Jena made it a simple, straightforward process. With regards to communication and appointments, she is organized and prepared, informed and patient. She is honest and trustworthy, and you immediately get the sense that she is looking out for your best interest. Thank you, Jenna!” – Laura R. via Facebook.