Bidding Wars in this Sellers Market.....

[David Krulac]

Here's some things that have gone on here:

A single family detached house had 21 offers

A two unit property had 6 offers in less than 24 hours

A four unit apartment building had 11 offers

A buyer put in a $10,000 escalation clause with no cap, saying they would pay $10,000 MORE than the second highest offer

Perhaps you have similar tales from your area, I've never seen this strong a Sellers Market in my long time buying real estate.

https://www.parealtors.org/bid...

[Marcus Auerbach]

Similar situation in Milwaukee, here are my recent listings:

1.) Cute cape cod SF, updated incl new kitchens and bathrooms, great lot with mature trees - asking upper 200's, 5 offers, all over asking

2.) Good size ranch, updated and amazing interior design, staged, mid 300's, 62 showings and 17 offers in 2 days (that's a new record) no appraisal contingency

3.) Large bungalow, original style with period matching updates to kitchen and baths. 6 offers, highest with no appraisal contingency

So, what do all these have in common? They were all updated, staged and our photographer did an amazing job! They showed really well and looked like out of an episode of an HGTV show! This draws in buyers like crazy!

But that is NOT the whole story! There are a lot of houses that do not sell like this! 

About 35% of all listings in Milwaukee do not sell in the first 2 weeks. They either have issues, are ugly, use bad cell phone pictures, are overpriced and sometimes a combination of all of them. We definitive direct our buyers to stay away from the shiny listings and pay close attention to the second and third tier listings. There are great deals to be had. We are under contract on a 600k home for just over 500 and we are getting a new roof, windows and some siding repair paid from the seller.

Are we in a bubble? 

I don't think so and here is why. Prices are driven by buyer demand, which comes from millennials starting to buy houses. They are the largest demographic segment we have (about a quarter of the population) and they are new to the real estate market, but their are tired of paying rent (the oldest millennials are now 38) and make 40% of our buyers. And they just got started, so far it's only the oldest of them who are buying. On the supply side, old people live longer and are not vacating their houses. And new construction is not a factor in the city: Milwaukee is fully built out, no more land to develop, just a few infill lots) and in the suburbs you are looking at 500k and up (by the time you add driveway, topsoil, grass and landscaping). So we have a huge price gap between existing homes (185k median) and new construction, limited supply and a rapidly growing amount of buyers looking for homes under 300k.

It is difficult to imagine circumstances where these fundamentals would change over the next ten years. What would stop millenials from wanting a home? What would cause new construction to drop 30% in price? What would make baby boomers and the silent generation vacate their homes?

It does not matter if we have a pandemic, a new president or not, if we have 5% or 15% unemployment - that will all have some impact, but it will not change the supply and demand situation.