The real estate market is an ever-changing landscape. That’s what makes it fun! It’s also something that impacts most people, whether they’re buying, selling or just concerned about the value of their important asset.
The past 5 years have been a rollercoaster ride, to say the least. The COVID years kept us running like our hair was on fire and the last year and a half has left us scratching our heads – perhaps a result of that fire!
But here we are, settling into the current “new normal”, trying to analyze trends and behaviors so we can best advise our clients. It’s a bit of an art meets science exercise. On one hand, we ask ourselves, “How does it feel right now?” and on the other hand, we reach for data. Both can be variable, based on who has the ice cream scoop. Even so, let’s try to shine a light on things.
Our core market area of Northwestern Wisconsin is unusual and unique. We have a blended community of local residents and second homeowners. There are wide socio-economic swings, the properties are far from homogenous, and the weather plays a starring role in just about everything we do. Our main towns and surrounds include Siren, Webster, Danbury, Grantsburg, Frederic, Spooner and Minong, WI. We have hundreds of lakes, many rivers and thousands of acres of wooded land. Being just 2 hours from the Twin Cities makes us a prime target for many types of buyers. One of the things that brings it all together in perfect harmony is the people who want to be here are, in many regards “kindred spirits”. That’s a big reason it feels so good here. If you know, you know.
If you’re reading this, you probably know all of that already, but it’s important to set the stage. The way we live, work, and enjoy this special place is morphing over time. The fluidity of today’s life allows many people to set flex schedules for work and school. Retirees are younger, healthier and more active than ever before and are looking for the best quality of life they can afford. All of those things are coming to life here, in this place that used to feel so far from “civilization”.
Given that, this has become a very “house-centric” market – for both waterfront and off water properties. That’s important to note as we study the first quarter.
The overarching story is low inventory. It’s no surprise and is a similar theme to what’s being seen across the entire country. It’s created a bit of gridlock for buyers and sellers. If you want to buy, there are few properties available. If you want to sell, it’s difficult to find the next place. The result is a whole lot of nothing. Many would-be buyers and sellers are simply choosing to sit on their hands and wait for something to change.
Unless! Unless we’re talking about “move-in-ready” homes on and off the water. Those properties are still selling quickly at or over the asking price in most cases, as long as the original list price is appropriate and in line with recent and comparable sales. The buyers are driving the price up in the face of competition and by their own choice, not the seller.
On the topic of driving the price up is the Escalation Clause. We’ve seen it used in purchase offers here and there, only to backfire. In fact, some agents state clearly in the MLS that no Escalation Clauses will be accepted. It’s a clause that’s added to an offer to purchase stating the buyer will overbid other offers that come in higher. In short, both agents and sellers look down their nose when the tactic is used – at least in this market. As one of our recent sellers said, “Man up!”
One of the other foibles we’re seeing from some sellers and/or their listing agents is an overreach in list pricing. Buyers aren’t having it and it’s not working. Buyers are too informed and too sophisticated to pursue a property that is overpriced. As a result, we’re seeing those properties sit with no activity and then engage in a series of price drops in order to get in line with what makes sense. Then they sell.
Homes and properties that are not well maintained or are outdated are not selling as quickly as they were during the pandemic. This is another category that is seeing a series of price drops before selling.
Lastly, there’s a growing trend of agents from far outside the area, even outside the state, who are listing and selling property here. Legally, if you have a license in Wisconsin, you may practice real estate anywhere in Wisconsin. From a practical standpoint, it doesn’t mean you’re competent. The numbers are so staggering that it gives us some concern about surprises that may rear their ugly head for homeowners in the 5-year horizon down the road. As was outlined earlier, this is a unique and unusual market. Nothing here is plug and play. Our properties and the important aspects to take into consideration are complex. As was also stated earlier, if you know, you know.
Bottom Line: Choose your agent wisely! ~ Wanda Boldon