Baby Boomers may be stalling supply of available homes as housing market struggles
MADISON, Wis. (WMTV) - Right now, if you’re looking to buy a home you know the housing market in Wisconsin is bad for buyers and great for sellers.
The median price of a home in the state has skyrocketed over the past year, rising 10.2%, according to a Wisconsin Realtors Association report for March 2022. The report says the median price of a home in March of 2021 was $230,000, it jumped up to $253,500 in March of 2022.
Marquette Professor of Economics David Clark, who is a consultant with the Wisconsin Realtors Association, said this price hike is partly due to low inventories. Clark said this is partly because more potential sellers are baby boomers who have stayed in their homes through the great recession and could not justify selling their homes at a loss, during a time when most baby boomers would downsize.
“And so, we lost about a half a generation 10 years of housing supply as baby boomers simply aged in place for full for them for that that period. And so that works for a while. Oldest baby boomers are in their mid-70s now and you can’t run out run Father Time forever,” Clark said.
Clark adds, once this generation starts selling their homes, the supply and demand will begin to balance.
“Hopefully we move in that direction this year. I really think it’s likely that that will, we’ll see some moderation on the demand side. Baby Boomers, boomers will start selling more homes and so it will get to the point where, where at least we’re moving away from zero,” Clark said.
Clark also points to current inflation problems as a reason for higher mortgage rates, which have increased from 3.08% in March 2021 to 4.17% in March of this year, according to the report.
“When inflationary expectations rise, that pushes up the long-term interest rates and a mortgage rate, by definition is very long term. It’s those significant increases in inflationary expectations as well as the fact that the Federal Reserve has started pushing up those short-term interest rates that is, is really serving to increase mortgage rates,” Clark said.
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