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

Your property could be worth much more than you ever imagined. Even though interest rates have changed, Madison home and condo prices keep rising in 2018. Here's our summary of the latest trends in the Madison area real estate market.

Prices

Madison home prices rose to $154 per square foot through the month of February. This was a record high for our market and a 9% increase from last year. 

Madison condo prices also rose to record highs through the month of February.  

Inventory

Prices are rising because demand is strong and housing is in short supply. In February and March, there were only .7 months of single family home inventory in Madison - a rock bottom low for our market. 

Condo supply is also very low. Right now there is

As of this writing, the rate for a 30-year fixed rate mortgage is at about 4.5% (for a real-time update on mortgage rates, click this link). This is a jump up from where the rate has been over the last several years, but still very low by historical standards.

How will higher mortgage rates impact the Madison real estate market? 

In the short-term, higher mortgage rates are creating some uncertainty, especially for buyers whose financing budget is tight. In the long-term, we believe higher rates will prove to have a positive impact on the market. Madison area real estate prices have been rising at an unsustainable pace, and higher rates are needed to temper that growth.  

Do you have questions about how higher rates will affect your purchase

It's only February 15th, but the hot Spring real estate market has officially arrived to Madison, Wisconsin. Talk to any local REALTOR and they will tell you that the competition is fierce for a limited supply of properties. Our latest market data provides some great insight into the current inventory, sales, and price trends in Madison. 

The Madison single family home market

Here's a quick overview of the Madison single family home market. 

Single family home inventory

Single family home supply continues to trend toward new historic lows. Right now there are only .7 months of supply available for sale on the MLS  - down from .9 months at the same time last year. Active MLS listings are down 25% from a year ago, and an amazing 52% of all

Why do you absolutely need a good buyer agent in the 2018 Madison real estate market? The answer comes down to three words: Historically Low Inventory. As our latest home report shows, Madison single family home supply is now below 1 month of inventory.

In the Madison condo market, inventory is down to a historically low 1.2 months of supply. 

How does historically low inventory impact buyers? 

In a low inventory market, the best properties sell very quickly. That means in today's market the buyers who rely on their own internet searches to find properties and schedule showings usually miss out on the opportunity to buy. Very often they're distracted by properties that already have an accepted offer (hint: this is a very common theme for

Our most recent single family home report shows 2018 is shaping up to be another strong year for sellers in the Madison area. Right now there is only 1 month of home supply in Madison, which is about as low as it can go for our market. 

A closer look at inventory shows how supply has tightened over the last year:

• In December of 2016, a total of 438 Madison single family homes were listed for sale on the MLS. In December of 2017, that number dipped to 376 (a decrease of 14%). 
• In December of 2016, 33% of single family home listings had an accepted offer. In December of 2017, the percentage increased to 39%. 
• In December of 2016, 1.4 months of supply were listed for sale. In December of 2017, supply decreased to just one month. 

This year we're getting a jump on our annual predictions for the Madison real estate market. Without further adieu, here our real estate predictions for 2018. (For a look back at last year's predictions, check out this post.)

#1: New home and condo construction will remain low. 

New apartment buildings continue to pop up all over the city. Meanwhile, single family home housing starts have plateaued in 2017, while new condo construction remains almost non-existent. All signs point to more of the same in 2018.

#2: The foreclosure pipeline will be nearly empty. 

Madison area foreclosures are at a 16 year low, which means distressed property listings will be relatively rare in the coming year. 

#3: Housing demand will remain strong. 

We recently added a view of the cash buyer market to our monthly home and condo reports - and the results provide some interesting takeaways for both buyers and sellers. Here's a quick summary of our findings. 

Cash offers are common in the condo market. 

Overall, 1 out of every 5 Madison condo sales through the month of October have gone to cash buyers. This is below the historical high of 26% in 2012. Cash offers peaked 5 years ago when Madison condo prices bottomed out. 

Takeaway: Based on current market trends, buyers and sellers should expect at least one cash offer whenever multiple offers are submitted for a condo listing. 

Cash offers are most common with higher priced condo listings. 

Baby Boomers are the key drivers of this

Madison condo prices are rising rapidly. As we recently reported in our latest market update, prices are up 13% through the month of October. That's a huge year-over-year increase - and one that's not sustainable. Although we don't expect prices to increase another 13% in 2018,  a 10% increase is entirely possible. Below we've outlined 5 reasons why local condo prices will continue to escalate in 2018. 

5 reasons why Madison condo prices will rise again in 2018

#1: Historically low supply 

Right now the Madison condo market has only 1.5 months of supply. This is about as low as it gets in our market. Historically low inventory will push prices higher in 2018. 

#2: An empty pipeline

Very few new construction condos are being built to

We recently noted in our October real estate update that there are only 1.7 months of supply in the Madison housing market. We're expecting more of the same for the foreseeable future, and here's why:

New home construction is low. 

Although there is a genuine need for more inventory, new housing starts remain about 50% below the peak levels from 2002 - 2005. One big reason for this is the last real estate downturn put many home builders out of business. With fewer builders in the marketplace, fewer homes are being built.

Housing starts for duplexes and single family homes have basically plateaued, as can be seen in this graph below. It's also important to note that new condo construction is at a virtual standstill and nowhere near the level