First-time homebuyers face challenges in low inventory housing market

MADISON, Wis. (WMTV) - The demand to buy a home is through the roof throughout south-central Wisconsin. The problem is, there are not enough houses on the market right now to keep the price of homes more affordable.

Sydney Jupitz and her fiancé Scott Zimmerman are first-time homebuyers, and they just moved into a condo in downtown Madison with their dog Monty. After renting for the last six years, the couple is excited about making the space their own.

“Oh, we learned how to spackle and we’re that fixing a hole in the wall is actually easy and cheap!” Jupitz said.

However, finding an available home to buy was anything but easy and cheap.

“We certainly could not get a home in a single-family house in this area. There’s so few of them too,” Zimmerman said.

According to the Wisconsin Realtors Association, new listings are down nearly 18-percent and total listings are down more than 20-percent over the last 12 months.

The Realtors Association of South Central Wisconsin CEO Ruth Hackney said in previous downturns in listings, prices were also down, but that’s not the case right now.

“And in this case, we’re still seeing a 5% increase in median value. So, homes are still appreciating even though sales volume is down. So, we’re kind of in an interesting place that I don’t know a lot of markets have seen before,” Hackney said.

The President of the Realtors Association of South Central Wisconsin Melissa Bjerke Markgraf said properties that are available receive multiple offers often exceeding the asking price.

“We’re seeing properties that are going for 10% over list price and upwards. We’re seeing no contingencies in these offers, we’re seeing cash,” Bjerke Markgraf said.

This increase in competition with cash creates a disadvantage for many first-time buyers who rely on financing to make a purchase.

“The number one creator of wealth in our communities and in our country is homeownership and with housing prices increasing double digits over the last five or six years, that is likely a huge impact on where the cash is coming from for people who can make all cash offers,” Hackney said.

Why are there so few homes available? One reason- pandemic supply chain issues led to a lack of construction.

“You couldn’t get a board anywhere, you know, they shut down the border for hauling in lumber. The trades right now, you can’t get people to actually build the houses and so there’s a delay for builders, not only with supplies, but also with trade with the actual construction,” Bjerke Markgraf said.

Also, the low supply of single-family homes can’t keep up with the ever-growing demand.

“I think by the influx of the people coming in, that also contributed to the inventory. You know, we’re just in a crunch right now. There’s no way to get around that,” Bjerke Markgraf said.

So, what can first-time home buyers do to become homeowners? Potentially look to buy at a different time of year.

“Spring is the insane time for a purchase. Maybe look at October, you know, you’re not going to have as much inventory to consider but you’re also not going to have as much competition,” Bjerke Markgraf said.

Buyers may also have to lower expectations, including looking at homes in more rural areas.

“Look at this as you’re not forever home and go, this is a good spot for me to be at for a period of time, and it might become my forever home. But right now, it’s good,” Bjerke Markgraf said.

Jupitz and Zimmerman don’t believe their new condo is their forever home and that they will most likely grow out of it in the next five years. But in the meantime, they are living in a neighborhood they love and customizing a home they can finally call their own.

“Really gonna settle down roots and you know this micro community of, you know, a building in this community of a neighborhood. And I think that’s really exciting is you know, the, the security of the finances, and also the security of just like knowing where we’re going to be,” Jupitz said.

The couple said their biggest piece of advice for first-time homebuyers is to use the resources that are out there to teach you about the process of buying a home in this seller’s market. For example, they attended a UW first-time homebuyer seminar and said it was extremely helpful.

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