Southeast Wisconsin real estate market rebounds


Tammy Klemmer

Vice President and Chief Loan Officer, Johnson Financial Group

Milwaukee Magazine: First, what does the Milwaukee Metro real estate market look like right now?

Jaworsky: Rising interest rates did exactly what it was designed to do. This has returned the market from absolute madness, which was unsustainable, to a more normal market. It’s still a very rapidly changing market here in the metropolitan area. People from other places are surprised that we’re still getting two, three, four offers on many ads, but it’s definitely slowed down. I specialize in Wauwatosa, and we had seen maybe five to eight active properties [for sale] at a time. Now we see in the 30s.

IPpoliti: This spring is unlike anything I’ve ever experienced, just the challenge of getting offers accepted by buyers. I don’t think it’s a healthy market. I don’t think it’s a sustainable market. I think people who are qualified and want to buy a house should be able to. So I’m glad the foot has slackened a bit, but this is by no means a situation where buyers are negotiating big house discounts or having their pick of 10 houses. It’s still a seller’s market. It’s just not a crazy seller’s market like it was a few months ago.

Clemmer: I will intervene from the point of view of loans. I echo what Beth and Justin say about the market. It is, if we dare say, a bit normalized. We have our hot [areas], but there are very beautiful areas that are more normal. If you’re interested, go ahead. Discuss what you are looking to do. Find out the financial area you should be looking for and proceed from there. Don’t be swayed by what you hear in the market, water cooler talk or headlines. Get the facts from the experts.

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MM: Tammy mentioned some areas of the market that are less competitive. If people are looking for deals, are there places they can find them?

IPpoliti: I really like some of our subway pockets. You have some of our great Milwaukee neighborhoods in the Mount Mary area, the Bluemound Corridor. I tell people, if you put a blindfold on and take it off, I don’t think you’d know if you’re in Tosa or not. By going south from Milwaukee to the Caledonia/Mount Pleasant area, you can get great value and be close to Milwaukee, Chicago, the lake.

Jaworsky: I definitely agree with Justin. I got a few headlong buyers [to the Caledonia area]. You get a lot of house for your dollar compared to here. And you definitely get a very nice house with a lower price just north of the center [Street] in Tosa, whether you mean Enderis Park or west of there. The Cooper Park area is also very popular and very nice, very good values. This Bluemound hallway has always been strong. We see a lot of people from Wauwatosa slipping into West Allis. Now it’s competitive there. And it’s a foodie town now, with all these trendy restaurants. If you’re willing to open your mind and not just visit all those red-light districts everyone talks about, you can find a great home.

MM: What are some of these hot and competitive areas right now?

Jaworsky: East Tosa is always hot. Shorewood is crazy hot. I mean, there’s practically nothing on the market in Shorewood right now, and everyone wants it. Bay View is still very hot. New Berlin in the [$200,000-$400,000] range, oh my.

IPpoliti: Ozaukee County, remaining on the [Interstate] 43 line, is super competitive. East Side of Milwaukee, Mequon, Grafton, Cedarburg. People see a lot of value in it, and the supply is limited. Our southern suburbs are really strong: Franklin, Greendale, Greenfield. People pay a premium to live in these areas.

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MM: And how do rising interest rates affect affordability?

Clemmer: It all comes down, in my opinion, to being comfortable with your monthly payment. A number of tenants are getting rent increases of 20% or 30%. And although [media] outlets say, “Interest rates are very high”, they are still below 1981 rates by 16% to 18%. So we have to put things in perspective. Watch a monthly [mortgage] Payment. Are you comfortable with this monthly payment compared to what you pay in rent? And what will the rent be next year and the year after? You cannot be paralyzed because an interest rate is higher than it was last year at this time.

Jaworsky: It sounds cliché, but we don’t want to be a nation of tenants. We want to be a nation of owners because that is really the path to wealth creation and stability. Having a fixed rate mortgage is the best protection against inflation right now.

IPpoliti: I like being in Southeast Wisconsin because our economy remains fairly steady and steady. We’re not in California or Colorado, where you see spikes and dips of 30% to 50%. Over the past 10 years with real estate, you have seen an upward progression. It’s not just a one- to two-year hot zone – it’s a long, steady stream of upward progression you can count on. That’s so much potential a buyer can benefit from. I sit down with people who have owned homes for five years, and they have six-figure home equity to them. What would it have been like if they had paid rent for that time? So I strongly recommend anyone qualified to find out what they are comfortable with for the monthly payment.

MM: What should buyers know about these financing options?

Clemmer: The interest rate is important, but it is not the only factor. Start by having a conversation [with a lender] to explore what your options are. If you own a home, do you plan to buy before selling? Do you need a bridging loan? Where do your down payment funds come from? There’s a lot that goes into these initial conversations to get you and your lender on the same page. Ultimately, we want to be in position with a fully subscribed pre-approval. Everyone else who writes an offer will receive a pre-approval letter, but we want to present yours in a way that makes you stand out from the rest of the offers.

We offer a lock and shop program. You can lock in the interest rate for 180 days at the start of the process before you get an offer, with a free ‘float down’ option if rates are lower when you have an accepted offer.

MM: What about people who want to downsize? Which areas have smaller options available?

Jaworsky: It’s hard. For ranches and condos, there’s next to nothing, and it’s super competitive. There’s New Berlin and Menomonee Falls. Lots of people will go downtown and the East Side. Although sometimes it’s too busy for people used to a quieter community. You have to be ready to explore. The farther you go, the more the market slows down and you have a bit more leeway. It’s a little quieter, a little more open, and it’s not as competitive.

IPpoliti: We have great condo options in the southern suburbs: South Milwaukee, Franklin.

Jaworsky: Cudahy, St. Francis, South Milwaukee are often overlooked. Butler [too]. These are large communities that have very nice houses.

IPpoliti: You are near the lake. And for what you can get for your money there, it’s a treasure of a place.

MM: Which suburbs have grown the most in the last 10 years?

IPpoliti: Oconomowoc has seen a lot of development. Caledonia and Mount Pleasant have a lot of development. Washington County has seen a lot happen. After West Bend and Hartford, there have been many. You are still less than an hour from Milwaukee.

Jaworsky: Oak Creek, I think, has grown further with Drexel Town Square.

MM: Even though the market has normalized somewhat, as you said, it remains competitive. How can buyers improve their chances of getting an accepted offer?

IPpoliti: I can’t talk enough about working with a local lending institution. We have amazing established local financial institutions like Johnson Financial Group. I can tell you that any listing agent who is in a competitive situation will look very closely at the bank letters they receive, and if there are three or four similar offers, and one of them is from a large local credit institution, this will be a competitive advantage.

Jaworsky: A big mistake I see buyers make is using an out-of-state lender. Real estate is state specific. Laws change from state to state. And working with a professional real estate agent will help you make the most competitive offer. Because every seller is different. Some people want a quick close, some people want a close [months out] because they are building a house and it won’t be done before.

IPpoliti: Good agents talk to each other too. I can call Beth and say, “What is your salesperson looking for in an offer? and get a very good overview. If you are working with an agent who does not take the time to log into our market, this can also be a big disadvantage in competitive situations.

Clemmer: Work with people who are knowledgeable and as passionate as you to get your dream home. Make sure the communication is there, the accessibility is there. So as everything falls into place, you have the group of people around you who are going to bring you to the table.

IPpoliti: It is very easy to walk around, call a registration panel and be connected with an agent. But when buyers do that, they have no one representing them, looking out for their best interests. Take the time to meet with the buyer’s agents, as this is the biggest purchase of most people’s lives.

This story is part Milwaukee Magazine’s October issue.

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