Housing Market Falls into Decline in Milwaukee
With the economy suffering a huge blow from the Covid-19 pandemic that’s affecting the entire globe, many states in America are feeling more of an individual crunch than others. Some states, like the Dakotas, Montana, etc, have fewer than 100 cases and are able to keep their economies going. Other states, like Wisconsin, and big cities like Milwaukee, have thousands of people suffering from the virus. This means that their economies have been locked down, and things like the housing market suffer mightily while the world tries to get its collective hands around a very scary and very real threat.
Unfortunately for Milwaukee, they’re feeling the sting of the national average in the housing market. As of the 5th of April, it was reported that new home listings were down 27% from the previous year, while some areas were experiencing a decline of over 56% in downturn. That’s a major swing, and it’s all brought on by fears of the virus spreading.
There are a lot of people in the city who are looking for homes generally, but their purchases have been put on hold. At a time when people are supposed to remain locked down, taking days or even weeks to move into a new home is something that won’t be risked by many people, whether it’s allowed or not by local governments. Though what’s worse for housing markets is that even if people were willing to make that move and purchase homes, fewer people are listing their homes.
One thing that typically happens when a person lists their home for sale is that they’ll move into temporary housing, or have to plan a big move themselves, once their home is sold. So, basically, what you’re seeing here is a fear, or even a prohibition of the moving aspect on both sides of the coin. The buyer and seller both have to typically worry about moving into new housing, which flies in face of all those stay at home orders issued by local governments.
The Fear of Individual Area Crashes
The real fear here for most economists when speaking about the economy and the housing market is that a domino effect might take over, enabling the downturn to snowball out of control. For instance, with Milwaukee suffering right around a 30% downturn, the lack of new houses on the market and new buyers interested in something that affects neighboring towns and cities. It spreads out, and people start to believe that something must be very wrong, if people in big, busy cities are no longer buying and selling homes. Pretty soon, the entire state is affected.
This is something that dominoes out from virus hotspots in states and affects the entire state eventually, and it’s something that seems to happen in most states. While a state like Montana likely won’t have to deal with any virus fears, at least if current projections hold true, their real estate market will almost certainly be affected by the way other states act.
A bunch of states with a floundering housing market will cause all mortgage lenders to basically seize up and stop lending. This ripples out in a way that the entire nation’s market is affected, with reverberations that can even be felt far past the epicenter and into Canada and even Mexico.
It Might Not Be That Bad
Though experts are torn here, just like medical experts are torn on the virus itself. A lot of experts see a silver lining. They believe that, taken as a whole situation in context, a downturn might be good, because it means more people are staying home. With more people staying home and not spreading the virus around, it means that the virus will not be an issue for nearly as long as if people were out and about getting infected. So what a housing market fear may accomplish, according to some theoretical projections, is compelling people to stay home until which point the virus blows over.
The hope here is that if the virus blows over quicker than expected, people will be excited to jumpstart their lives again and the housing market will actually experience a huge boom.
For right now, Milwaukee is hurting in their housing market. Though they're far from in dire straits. The fundamentals of the market are still very strong; it's just that people are too worried about getting sick to buy homes. Once those fears subside, it may take back off in a big way.
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