We've written a lot about the low levels of inventory in the Madison real estate market. Here's another look at housing supply from a slightly different angle, which shows the inventory crunch in Madison is a much bigger deal than most people realize.
Madison Single Family Home Supply
Each month we take a few different snapshots of the housing supply in Madison. We've been doing this for a few years now, so we've built up some good historical data for our reports. This first snapshot shows the total number of single family home listings in March 2016, March 2017, and March 2018. Here's how total listings have trended in Madison over this two-year stretch.
From March 2016 to March 2018, the total number of single family home listings decreased by 44%. Keep in mind these numbers include listings with and without accepted offers. When we remove accepted offers from the data, here's what the trend looks like.
Since the above graph represents listings without accepted offers, you can think of this as the "real inventory" that's still available for purchase. From March 2016 to March 2018, real single family home inventory dropped by 46%.
Madison Condo Supply
The decrease in listings has been even more dramatic in the Madison condo market. Here's how total condo listings have changed from March 2016 to March 2018. Remember, these numbers include listings with and without accepted offers.
Over a two-year stretch, total condo listings decreased by 56% . However, when we remove accepted offers from the data and look at real inventory only, the decrease is even larger. From March 2016 to March 2018, real condo inventory decreased by 59%.
How low supply is impacting the Madison real estate market
Historically low supply is impacting the market in a few significant ways. First, low supply is driving Madison real estate prices higher. Even though interest rates are rising and prices are at record highs, we expect prices to continue to climb throughout 2018. It comes down to simple supply and demand. Right now there are many more buyers than sellers in the city of Madison.
Another dynamic we're seeing right now is a large number of buyers who are extending their property search to well outside the city of Madison and even outside of Dane County. As buyers seek more affordability, the demand for real estate in outlying areas has increased, which has led to a supply shortage in many surrounding communities.
A third important change is the stakes are often a lot higher for buyers and sellers in this low inventory market. For buyers, it's about putting a roof over their head. Many buyers have very real concerns about whether or not they'll be able to find a home for their family. For sellers, it's about money and return on investment. This year we're seeing a lot of sellers leaving thousands of dollars on the table - because they're not taking full advantage of the hot spring market. We'll take a closer look at this topic in a future a post.
Are you in search of a REALTOR who will help you make the most of this year's low inventory market? Whether you're buying or selling, we can help. Contact one of our full-time agents, and tell us more about your real estate goals in 2018.
More inventory data
Here are a few additional snapshots which provide more insight into the latest supply trends, starting with months of inventory. From March 2016 to March 2018, the supply of single family homes in Madison dropped from 1.3 to .7 months. This is the lowest level we've seen in the city of Madison.
Meanwhile, Madison condo supply dropped from 2.5 months to 1 month of inventory.
Our snapshot of listings with accepted offers provides another telling view of the market. As the graph below shows, low levels of single family home supply are limiting the number of accepted offers in Madison.
And the trend in the condo market is very similar.
This article is published courtesy of: Dan Miller, REALTOR Mad City Dream Homes & RE/MAX Preferred