The market this year is playing out as expected. Inventories are historically low. Properties are selling quickly. And prices are rising rapidly throughout Dane County. Here's a quick market snapshot covering a few of the county's largest communities.
We use the price per square foot to track the change in local home prices. Property values are rising rapidly and setting new highs in Fitchburg, Madison, Sun Prairie, Verona and Waunakee. We expect Middleton home prices to reach new highs within a few months.
Low inventories and strong demand are driving prices higher. Bidding wars and "escalation clauses" have become very common this spring, especially for listings priced under $350,000.
The condo market used to be cold, but not so anymore. A lack of affordable housing has created a huge demand for condominiums across all of Dane County. Inventories have been shrinking for several years and are now at historically low levels.
The condo price per square foot is up in every local community, and by some large amounts. Condos priced under $250,000 are especially hot right now. We expect condo prices to increase by roughly 10% by the end of the year. Our early numbers are based on small sample sizes and should become more balanced as we collect more data in 2017.
Low appraisals are an issue this spring. In some cases condo prices are rising more quickly than appraisers are able to justify. Soon we'll share a few tips on how you can protect your own listing from a low appraisal. Check in with our blog in a couple of weeks.
We use months of supply to track the inventory of homes for sale. Single family home supply is low in every local community, especially in Madison and Sun Prairie where the demand for affordable housing is strongest.
New construction has helped inventory levels in Middleton and Waunakee, but most of the home building is at price points well above $400,000. Inventory for more affordable housing is generally very tight across all of Dane County.
Condo supply is low in every local community. Rising rents and a tight apartment market have fueled the demand for condominiums.
Inventory is especially tight in Fitchburg, Sun Prairie, and Verona. Surprisingly, very few new construction condos are being built to address pent up demand. Supply levels will remain very low until more new construction condominiums start entering the market.
We normally expect growing home sales to accompany rising home prices. That's not the case in this year's market. Although prices are rising rapidly, closings are lower in most cities through the first 3 months of the year.
Low inventory is restricting sales in this year's market. Verona is the only community in our sample with any significant sales growth.
Dane County condo sales show some wild fluctuations, depending on community, through the first 3 months of the year. Keep in mind these early numbers are based on small sample sizes. Sales should even out over the course of the year, showing flat to little growth compared to 2016. Low supply will restrict the number of closings in 2017.
Right now demand far exceeds supply in the condominium market. Supply will remain very tight until local municipalities do more to encourage the development of new condo communities.