MADISON (WKOW) — Right now, real estate agents say they’re seeing unprecedented demand for homes in the Madison area, which is causing bidding wars and driving up prices.
Houses under $400,000 are selling in less than two months, sometimes with multiple offers submitted the first day. Sometimes traditional buyers are being outbid by those with cash offers. Real estate agents say it’s getting increasingly difficult with more competition for fewer homes.
"Last year, I would have to write three offers to get one accepted, this year it’s more like five," said Tobi Silgman, a realtor with Lauer Realty Group.
Silgman’s client Julianne McFadd has been searching for a home in Madison for months. She put in four offers that were rejected but she says staying motivated finally led her to the home of her dreams on the east side. She had an accepted offer two weeks ago and just finished the inspection.
"It just had to feel right … you just walk in and you know," McFadd said. "I was so excited, I cried, because we’ve had a couple rejections and I needed to have this house."
Realtors in Madison have been dealing with this increasing problem in the past few years. They didn’t see the slowdown they’re used to over winter, after a difficult season last year, too.
"The savvy buyers were out there early because they were in the market last year and maybe didn’t get a house and so they knew they wanted to work with their realtor early in the spring season and find just the right thing before the competition heated up too much," said Stan Hill, president of the Realtors Association of South Central Wisconsin.
Hill says it just comes down to supply and demand, which is a nationwide problem since the recession, when builders slowed production on new homes. Once the market bounced back, new building has not kept up with the need. Plus, in the Madison area, first-time buyers are now competing with baby boomers looking to downsize. Many want to live in Dane County, which is the fasted-growing area in the state. Sun Prairie is the fastest-growing city. People are increasingly more willing to go farther out of town to find a home.
Real estate agents say it’s good news for sellers, who are getting top dollar and special conditions in the deals. Plus, homes are now worth more. The median price range in 2012 was $200,000, but now those same homes are worth $265,000.
It’s a frustrating process for buyers, but Silgman says they can’t be discouraged by the tough market.
"I just tell my buyers when I sit them down that they have to be champs, they have to keep going, don’t give up. The people that give up are the ones that don’t get a house," she told 27 News.
The reward has come for patient buyers like McFadd, who’s finally in the home stretch. The paperwork is done and now she just has to wait for closing day in June.
"Keep going, it’s really, really hard, but I think if you just keep going you’re going to find the right one," she said.
Experts say the good news for buyers is interest rates are still good. While rates have gone up this year, they’re still historically low at 4.4 percent. Twenty-five years ago, they were more than 9 percent.
Real estate statistics show the higher the price of a home, the more time it’ll spend on the market in Dane County. In the lower half of the price range, houses are sold in less than two months. The more expensive ones average six months. But this year, realtors say they’re actually seeing competition on million-dollar homes, which is extremely unusual.