Wisconsin Real Estate Market Trends & Analysis


The Wisconsin real estate market has seen prices rise for the better part of a decade. Due to improving economic indicators and a lack of existing inventory, supply and demand fundamentals have increased prices for nearly nine consecutive years. As a result, it is currently more affordable for residents to rent in most parts of The Badger State than owning a home. The resulting dichotomy between rental and ownership prices will play a pivotal role in how investors proceed over the course of this year.

Wisconsin real estate investors should pay special consideration to long-term exit strategies. While recent appreciation rates may have limited profit margins on flips, rental properties are more viable than ever. Today, real estate in Wisconsin represents a great opportunity to invest in rental properties, and the lasting impact of the pandemic has created many tailwinds to further long-term trends. To be clear, underlying fundamentals in the Wisconsin real estate market support various investment strategies, but none appear more appealing than contributing to a rental property portfolio.

The Top Wisconsin Real Estate Markets


While the best real estate market in Wisconsin is up for debate, here’s a list of the cities investors may want to pay special considerations to:

Wisconsin Real Estate Fees & Regulations

Real Estate

Closing Conducted by: Lenders, Title Companies, Attorneys
Conveyance: Warranty Deed

Foreclosure Procedure

Primary Foreclosure Method: Judicial
Process Period: 6 - 10 months
Notice of Sale: Sheriff
Redemption Period: None

Taxes

Income Tax: 4.00%-7.65%
Corporate Tax: 7.90%
Sales Tax: 5.00%
Estate Tax: No
Inheritance Tax: No
Median Property Tax: 1.76%
Property Taxes by County: http://www.tax-rates.org/wisconsin/property-tax#Counties

Average Transactional Costs

Closing Cost: $2,706.00
Transfer Fee: 0.30%
Origination Fee: $2,035.00

Overview


  • Median Home Value: $213,537

  • 1-Year Appreciation Rate: +9.6%

  • Median Rent Price: $1,200

  • Price-To-Rent Ratio: 14.82

  • Average Days On Market: 63

  • Unemployment Rate: 5.5% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 5,822,434 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $61,747 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 12.28%

  • Foreclosure Rate: 1 in every 12,130 (0.8%)

Median Home Prices In Wisconsin


The median home price in Wisconsin is $213,537. At its current price point, the local housing sector is more affordable than the national average. Despite relative affordability, however, prices have been on the rise for the better part of a decade. In 2012 (February), in fact, the median home value in Wisconsin was as low as $138,000 because of the Great Recession. Since that point, the state’s median home value has appreciated 54.7%.

For some perspective on where Wisconsin home values are relative to national trends, the median home value in the U.S. is $269,039. Since the first quarter of 2012, the U.S.'s median home value has appreciated by as much as 67.1%.

Appreciation across the Wisconsin real estate market was directly correlated to the same factors driving national trends: a strengthening economy, improving confidence in the housing market, and a distinct lack of available inventory. The unique combination of these factors increased home values across the country while doing the same in Wisconsin.

While the Coronavirus threatened home values when it was first declared a pandemic, Wisconsin refused to be held back. In fact, the Wisconsin real estate market is firing on all cylinders, and home values are proof of the progress. While appreciation did slow at the beginning of the pandemic, several factors came together to increase home values for nearly a year. Increasing confidence in the housing sector, historically low interest rates, hopes of broader vaccine distribution, and a lack of available inventory have all created an impressive catalyst for buyers.

More and more homeowners are participating in the market, and activity looks healthy heading into the busy spring buying season. The competition in the Wisconsin real estate market should enable owners to increase prices, and people will pay the premiums. Consequently, it's safe to assume prices will continue to rise for the foreseeable future.

Wisconsin Foreclosure Trends & Statistics


The Wisconsin real estate market has a very low foreclosure rate compared to the national average. According to RealtyTrac, only one in every 12,130 homes in Wisconsin is considered distressed (default, auction, or bank-owned). At that ratio, the state currently boasts a foreclosure rate of 0.8%, right around the national average. One in every 13,482 homes in the United States is considered distressed, or a total of 0.7% of the housing inventory.

While the Wisconsin housing market may have an average foreclosure rate, there are still pockets of distressed inventory spread across the state. That’s not to say the following counties have high foreclosure rates themselves, only that they have high foreclosure rates relative to the rest of Wisconsin:

  • Langlade: (1 in every 3,118)

  • Ashland: (1 in every 3,217)

  • Jackson: (1 in every 3,299)

  • Juneau: (1 in every 3,750)

  • Burnett: (1 in every 3,853)


Tax Lien Investing

  • Tax Lien or Deed: Tax Deed state
  • Redemption Period: None after sale

Real Estate Investing In Wisconsin


For nearly 10 years, the Wisconsin real estate investing community has done well for itself. Once Wisconsin could climb out of the Great Recession, prices started to appreciate and haven't looked back. Despite rapid appreciation, however, demand was strong and propped up investor activity. Rehabbers have seen activity and profits increase year-over-year, and 2021 doesn't look to be the exception. Nonetheless, profit margins have grown smaller in the last few years and are expected to grow thinner over the course of 2021. Historic appreciation rates have made it more difficult to secure deals at a reasonable price. That's not to say investors can't flip homes in Wisconsin, but rather that the Coronavirus appears to have made other exit strategies more attractive.

With appreciation continuing to march higher, more investors are embracing becoming landlords. Long-term deals appear to be the optimal exit strategy for Wisconsin real estate investors, not the least of which include rental properties. Home values have increased to the point where they are too expensive. Still, the Coronavirus has created a new marketplace with three fundamental indicators that seem to favor landlords over rehabbers:

  • As recently as January of this year, the monthly average commitment rate on a 30-year fixed-rate mortgage was 2.74%. Rates remain under three percent but are expected to rise as the Fed expects the "reopening" of the economy to stimulate healthy activity. Despite expectations, prices are still low and will keep promoting buying activity over the course of 2021. The increased activity will most likely increase competition and home values at the same time.

  • With a 14.82 price-to-rent ratio, buying and renting in the Wisconsin real estate market are equally affordable. As a result, more people may turn to buying because it's often seen as the superior alternative. If that's the case, the state's already low inventory levels will be under more pressure, and prices will increase.

  • Home values in Wisconsin have increased for nine years, which means profit margins on flips have dropped. Investors are still free to conduct rehabs, but long-term rentals are more viable under the market's current conditions.


Investors are lucky to have several viable exit strategies at their disposal, but none appear more attractive than building a proper rental property portfolio in the wake of the pandemic. Too many important market indicators are pointing towards becoming a buy-and-hold investor to ignore.

Wisconsin Housing Market Predictions


The Wisconsin housing market has had a great run, much like the rest of the country. For the better part of a decade, in fact, real estate in Wisconsin has exhibited many of the same characteristics as its national counterpart. Price increases, confidence in the market, and several other indicators are in line with national trends, but what does that mean moving forward? What can the Wisconsin real estate investing community expect moving forward?

  • Buyers will seek affordable alternatives like Janesville: Located between Madison and Chicago, Janesville's location may attract buyers looking for cheaper alternatives. More millennials, in particular, may start calling Janesville home because of its proximity to larger cities in Wisconsin, but at a lower price point. At $195,778, Janesville's median home value is nearly $18,000 less than the state average. Prices have already increased 12.6% in the last year, and the trend should continue.

  • Inventory will drive appreciation: Prices in the Wisconsin real estate market have increased for nine consecutive years. While the driving force behind the latest bought of appreciation may be attributed to several factors, a distinct lack of inventory is perhaps the most prominent reason prices have risen so much. The Coronavirus has also prevented builders from adding to inventory, which only compounds the inventory shortage. As a result, prices should increase for the foreseeable future.

Wisconsin Real Estate Market Summary


The Wisconsin real estate market was hit hard by the onset of the pandemic in 2020. At the time, the Coronavirus had spread fear and uncertainty over the entire state's housing market. Within weeks, COVID-19 threatened to destroy nearly a decade's worth of progress. Fortunately, the setback was only temporary and actually may have lead to today's active marketplace. Thanks, in large part, to a relatively insulated jobs market, Wisconsin was able to not only rebound but thrive in 2020, and the momentum looks to continue over the course of 2021.

Sources:



https://www.zillow.com/wi/home-values/
https://www.zillow.com/janesville-wi/home-values/
https://www.zillow.com/home-values/
https://www.bls.gov/eag/eag.wi.htm
https://www.census.gov/quickfacts/WI
https://www.realtytrac.com/statsandtrends/foreclosuretrends/wi/
http://www.freddiemac.com/pmms/pmms30.html

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