New Report From Wisconsin Realtors Association Found Home Affordability Worst It's Been Since 2009

Thursday, June 27th, 2024 -- 10:01 AM

(Joe Schulz, Wisconsin Public Radio) A new report from the Wisconsin Realtors Association found that home affordability last month was the worst it’s been since the organization began tracking that metric in 2009.

According to Joe Schulz with Wisconsin PUblic Radio, that’s despite an 11 percent growth in sales compared to May 2023. A recent Wisconsin Policy Forum report also found that home prices in the state have risen faster than incomes in recent years.

At the same time, the state continues to face a housing shortage. As of 2022, the state needed to add between 140,000 and 227,000 housing units by 2030 to keep up with demand and accommodate growing its working-age population, according to a report from the Wisconsin Counties Association.

In a statement, Wisconsin Realtors Association President and CEO Tom Larson said the state’s housing market is a tough environment for buyers, due to high mortgage rates and limited supply.

“Unfortunately, affordability hit its all-time low point in May,” he said. “The good news is that supply has been improving since late last year, which has moderated the rate of price appreciation. Hopefully mortgage rates also will moderate and help improve our affordability during the summer sales period.”

David Clark, professor emeritus of economics at Marquette University and a consultant with the Wisconsin Realtors Association, said the affordability index is calculated using median home prices, median family incomes and 30-year fixed rate mortgages.

Of those measures, Clark said high prices and mortgage rates typically hurt affordability, while median family income growth can help affordability. Last month, the median home price rose to $315,500, a 6.9 percent increase over the last 12 months, according to Realtors Association data.

Clark said price increases in May were relatively moderate when compared to some of the increases the association has seen in the last couple years where prices went up by double-digit margins. He also said median family income growth has been relatively modest over the last year.

“The real challenge has to do with mortgage rates,” he said, noting those rates increased from 6.43 percent last May to 7.06 percent this May. “Until we really start seeing some improvement on those mortgage rates, we’re likely to have relatively low housing affordability.”

Inventories improved slightly last month, with new listings up 4.7 percent compared to May 2023, and total listings up 5.4 percent over that same period. But Clark said it’s still a seller’s market.

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