First-Time Homebuyers in Milwaukee Face Tough Market

Carmella D’Acquisto and her partner had been searching for their first home to purchase since 2019, and they were struggling to find the perfect house.

“My partner and I did not have the greatest jobs and I still had a lot of student debt to pay, so the first place I reached out to was my bank to see how much we would be approved for, for a mortgage, where we ended up only getting approved for about $130,000,” said D’Acquisto.

The couple did not like the amount they were approved for, so they applied at Wells Fargo, where they were approved for $175,000.

According to the Wisconsin Realtors Association, the median home price in Wisconsin is $265,000, which is up 13% from 2021. The national home median price has increased more than 20% over the last twelve months. For the City of Milwaukee, the median home price was $174,900 in April 2022, a 6% increase from April 2021, according to Realtor.com.

For first-time buyers, a real estate agent that is patient and willing to work with their clients is a must for the crazy market. For D’Acquisto, an understanding agent was a top priority. D’Acquisto and her partner had no idea where to start.

“Our friend had just bought a house and he worked with someone he really liked,” said D’Acquisto. “They were also first-time homeowners that have a family, and our biggest concern was talking with somebody or working with somebody who can work with absolute beginners, so we decided to reach out to him to see if he could help us as well.”

D’Acquisto and her partner were viewing homes primarily in the Riverwest neighborhood, listed for more than $175,000. They were not updated, but homeowners and buyers were waiving inspections.

“I felt like I was being gaslighted by society because there was no way any of these hunk-of-junk houses should have been the price they were. I couldn’t see myself, in good conscience, paying $200,000 for a house that looked the way some of them did,” said D’Acquisto.

They finally found a home in the Riverwest neighborhood that they adored. It was a three-bedroom, one-bath house with a three-season porch.

Agents Help Buyers Navigate the Process

Marty Reed is a real estate agent at the Shar Borg Team in Glendale. She specializes in first-time home buyers.

“The first-time buyers that I have been working with are pretty educated and ready to begin the process. They have done their research. They have been pre-approved, they know the areas and neighborhoods that they want to live in, and they have saved a substantial amount of money for a down payment, qualifying them for a conventional mortgage with an attractive mortgage rate,” said Reed via email.

Although Reed’s clients seemed educated and ready to begin the buying process, frustrations grew as well. Reed said that the most common frustration is the intensity of the market and its competition, but she says things are starting to become more “normal”.

“Although competition remains a frustration, the playing field is much different,” said Reed. “Instead of competing against six-plus other offers, there may be only one other. Instead of buyers waiving all of their contingencies, buyers may now be able to get their offer accepted with various contingencies. Instead of buyers having to bid $30,000 to $40,000 over ask, buyers may be able to secure the property at ask or below.”

According to Reed, things are starting to shift into a more “normal market” despite the rising mortgage rates.

“There is still a home for every buyer and there are buyers out there. It just takes effort and time,” said Reed.

Other Help For homebuyers

Home prices, interest rates and inflation make home buying a challenge, but first-time buyers in Wisconsin can take advantage of programs that help.

For cities like Milwaukee, Madison and Green Bay, Housing Resources Inc. offers several down-payment programs. They offer down-payment and closing grants, a housing cost reduction initiative, a homeowner opportunity program and what’s called the Chase homebuyer grant.

According to themortgagereports.com, the Wisconsin Housing and Economic Development Authority (WHEDA) offers two types of mortgages to first-time homebuyers. The first one is WHEDA Advantage Conventional, which is a 30-year fixed-rate mortgage that conforms to Fannie Mae’s rules, offered for single-family residences, 2-4 unit homes, manufactured homes and condos. The minimum credit score a person needs for this type of mortgage loan is a 620.

A second option is the WHEDA Advantage FHA, and that also is a 30-year fixed-rate mortgage, but it is backed by the Federal Housing Administration (FHA). With that loan, buyers can purchase a single-family home, two-unit properties, and Housing and Urban Development-approved condos. The minimum credit score for this loan is 640, which is higher than the FHA’s standard minimum of 580.

Data from the Mortgage Bankers Association shows that the average interest rate for the most popular mortgage loan in the United States is now above 6%.

In Wisconsin, as of Oct. 18, 2022, the interest rate for a 30-year fixed loan is 6.875% with 7.034% APR, according to USBank.com.