WAUKESHA, Wis. — High interest rates and relatively low supply continue to leave potential homebuyers struggling to find houses.

What You Need To Know

  • High interest rates and rising median prices are making homebuyer more challenging

  • Higher prices have prompted some homebuyers to stop looking

  • Realtors encourage buyers to set realistic expectations

According to the Wisconsin Realtors Association, interest rates were up from 6.8% in Nov. 2022 to 7.4% in Nov. 2023, the most recent data which is available. It comes as the average home price in Wisconsin has risen nearly 8% year to year to $280,000.

Travis and Sue Derby are both realtors. The mother and son real estate team work together at Shorewest in Waukesha.

They’ve noticed that while some aspects of the housing market have regulated since the height of the COVID pandemic, limited supply and rising costs continue to make home buying a challenge for many.

“Right now, what we see is it affects affordability,” said Travis. “Home prices and interest rates aren’t really congruent right now, so they (potential homebuyers) may have been looking at homes in the $350,000 range last summer, and this summer when looking at homes in that range they can’t afford it anymore, so they need to lower their price and expectations.”

He said one of the biggest challenges is lack of inventory. Even though so-called “bidding wars” (multiple people putting in bids for homes well over asking price) have cooled, it’s mostly because sellers are pricing homes higher.

“There are not enough homes available for current buyer demand,” said Travis. “Just like last summer, it isn’t a buyer really negotiating with the seller, it is the buyer competing with other buyers for that house.”

David Clark works as an economist for the Wisconsin Realtors Association. Clark said inventory of available houses for sale is getting better, but that is likely just tied to fewer people attempting to buy a home in these market conditions.

“There is some indication that our inventory situation is starting to improve a little bit,” said Clark. “That warrants watching over time. Part of that is that existing inventory is going further because some of the potential buyers have stepped back given affordability has dropped as much as it has.”

Meanwhile, Sue Derby said she has to work hard to reassure perspective homebuyers that they will get a home, eventually. It takes more patience than ever. In addition, she works to set them up with realistic expectations.

“I was just counseling some clients that they should not expect to get their dream home as their first home,” she said. “It is merely their first starting out home. Build a little equity, stay there three or four years, then move up to that dream home they thought they could afford when interest rates were lower.”

The Wisconsin Realtors Association regularly updates statewide data regarding home prices and sales, you can view that information here.