"So I basically need to "overpay" in order to secure a new home for my family" - I receive this question or something similar from clients often.

Rather than me speculate about what I (Ethan) personally think about the housing market, let's look at DATA - namely appraisal data. Have appraisals been coming in high? Low?

Based on the data below, here is my synopsis: Property values continue to rise, but even in this market, buyers are still able to get property at a fair value, and sometimes even BELOW an appraisers' assessment. (They're getting a deal, or "instant equity" after closing).

There are two answers to the question "How much is a house worth?":

1. A house is worth what someone is willing to pay for it. I prefer this answer, but lets look at the data.

2. Let's look at recent appraisals, in Milwaukee and Waukesha specifically, to see how things have been going. Focusing in on specifically the last 12 months, as well as year-to-date:

**This data is provided by Fairway's appraisal management company, covering all appraisals the company orders as of June 2023.**

Milwaukee:

1. Of the last 533 orders completed in Milwaukee in the last 12 months, only 5.6% have come in low (30). 165 appraisals have come in exactly at the contract price (not the list price). And here is the big whammy, 338 have come in ABOVE the contract price - that is 63%!!

2. How about just in 2023? Out of 201 orders, 67 were right at the contract price, 17 were below contract (8.5%), and 117 were above contract! 

What do we learn from this? The Midwest is charmingly consistent, compared to the coasts where we see property price increases and sudden drops. The purpose of an appraisal is so that a professional that is UNBIASED can make sure markets don't get inflated or out of control. 

If appraisers believe that over 50% of contracts are "Deals", then I would suggest we are in good shape. An appraiser has a rigorous process ahead of them: initial research, data collection, in person inspection, comparable sale study, etc. in order to create their reports. Yes they're human, but there is science behind it. 

Wisconsin property has intrinsic value because of supply and demand. There are not enough houses to satisfy the thousands of new first time homebuyers entering the market, while existing homeowners refinanced to rates below historic norms and are reluctant to sell.

Here is Waukesha data, which is fairly similar:

For Waukesha, over the last 12 months, we have seen 228 orders: 57 at contract, 15 below contract (6.6%), 156 above contract (68%).

For Waukesha this year so far, we have had 91 orders: 24 at contract, 10 below contract (11%), 57 above contract (62%). 

Question on this? Shoot me a text! 414-488-0438