Episode 12

State of Housing with La Crosse Area REALTORS President Damon Olson

About BizCast Greater La Crosse

We bring you news from the business community. From startups to experienced problem solvers, you’ll get in-depth insight on the challenges and opportunities of doing business in Greater La Crosse. Our show is a collaboration between WIZMNews.com and BizNews Greater La Crosse ( GreaterLaCrosse.media ).

Full Transcript [ generated by AI]

[00:00:00] Damon Olson: what was interesting too is that when rates stepped down a little bit in January of this year, the activity picked up.. That is interesting. It doesn’t take a whole lot for the rates to drop and then people are taking advantage of opportunity.

[00:00:19] Vicki Markussen: Welcome to Biz Cast Greater La Crosse I’m your host, Vicki Markussen. We’re bringing you news out of the business community, and some of the news has been with the Wall Street Journal. They have named the Greater La Crosse area as. In the top 10 for affordable housing, but not necessarily based on the criteria that we would think of.

[00:00:40] Vicki Markussen: So we have with us Damon Olson. He is the president right now of the La Crosse Area, REALTORS Association, but his body of knowledge comes from being with Coldwell Bankers River Valley Realtors. Damon, did the article surprise you with what they said about our market?

[00:00:56] Damon Olson: To be top 10 out of 300 in the nation, I would say yes.

[00:01:01] Damon Olson: But then being a native of the area, the region, and here, of course, we hear it all the time. We have such a beautiful place to live and a wonderful place to live. From that aspect, no. Yeah, emerging market, I think we’ve all seen that. We’ve seen the growth in our area. It’s based on economic data, property taxes, that type of thing.

[00:01:22] Damon Olson: And I had earlier conversations where it’s really. We’re in the Midwest, we’re not on the East coast. We’re not on the West coast. We’re not seeing the impacts and the highs and lows that they are there. So we’re very fortunate and I think we continue to get recognition.

[00:01:40] Damon Olson: In our markets and in our region. Just speaking directly to that,

[00:01:44] Vicki Markussen: yeah, so we were saying that as we were talking about this beforehand, we were saying that this is emerging markets. So they’re saying, they’re not looking at necessarily what we have right now. They’re looking at what’s to come and what are those market conditions for people that are looking to buy an affordable home. And one of the things that’s challenging is that affordable for a renter is different than affordable for a first time home buyer.

[00:02:14] Vicki Markussen: Someone who has a little bit more equity and wealth built up. So how do you look at affordability?

[00:02:20] Damon Olson: Yeah, affordability, I think for any of us is really what fits your budget, right? , yes. . Right, right. In the in that moment in time and what’s affecting affordability is the most talked about at the moment is interest rates.

[00:02:37] Damon Olson: That higher interest rate is gonna have an impact, direct impact on what your budget is, what your payment is, right? That starts to affect what you can afford. . So now if you are looking at a $300,000 home earlier with a lower interest rate, you’re maybe not looking at something between two 50 and 2 75.

[00:03:01] Vicki Markussen: To be able to fit your budget right because you, again, you don’t want to be overspending on that home. You just now get a smaller home. And what can you tell us about the market conditions? So what does the housing stock look like? What are average prices?

[00:03:17] Damon Olson: So the median home sale price just for January of 2023 was at 230,000 overall for the year in 2022 was at 255,000.

[00:03:33] Damon Olson: Now I think anybody that was paying attention to the market, that totally makes sense with all of the activity that was going on. The rates were favorable. So what’s interesting is that for the year of 2022 the supply or the inventory was about 1.4 months supply for the year. And it, in January it was 1.4.

[00:03:58] Damon Olson: And in 2021 it was closer to 1.5, 1.6. So it hasn’t moved a whole lot, but. That also reinforces the the numbers that say the last three years has been an inventory challenge. So that’s one of the toughest. Things there is, aside from the interest rate, is the inventory challenge,

[00:04:22] Vicki Markussen: right? It’s basic supply and demand, right?

[00:04:25] Vicki Markussen: If you know nothing else from economics, it’s supply and demand. So when you have high demand and limited supply, that impacts pricing. Very much so, yeah. Average day on market, I know that’s another metric that you look at.

[00:04:40] Damon Olson: Yeah, average day on market now and from the start of the year is down a little bit.

[00:04:46] Damon Olson: I think 2022. The overall days on market for the year was 60, 60 day, 68 days on the market. I should say it, days on market, it’s up right? Is that up or down?

[00:04:59] Vicki Markussen: It’s going. Days on market is shorter than what it had been, which you and I talked about earlier. Was 70 now?

[00:05:05] Damon Olson: Now. For January it was 73 days.

[00:05:08] Vicki Markussen: Yeah. So they’re staying on the market longer. 

[00:05:09] Damon Olson: Yeah. Just a little bit about, maybe not quite a week longer, but still plenty of activity. Yeah. So what was interesting too is that when rates stepped down a little bit in January of this year. The activity picked up. That is interesting. It doesn’t take a whole lot for the rates to drop and then people are taking advantage of opportunity.

[00:05:33] Damon Olson: Mm-hmm. .

[00:05:34] Vicki Markussen: And you have an interesting way of looking at the interest rates, like you talk about, essentially don’t wait.

[00:05:42] Damon Olson: Right. I’ve heard this said by others and we repeat it now and then to our agents with our firm. , you don’t, you marry the home, you don’t marry the rate, right? Mm-hmm. . So a rate is, it truly is temporary.

[00:05:57] Damon Olson: Your home can certainly be permanent, but you’ll have an opportunity to refinance. At what point in time we don’t necessarily know, but, for the, I think we talked earlier, Vicki, that, for homeowners who’ve been in their home for 10, 12, maybe 15 years. Within the last decade, they’ve all probably refinanced at least one time.

[00:06:22] Damon Olson: Because the rates your lenders will typically tell you, it needs to be a point or a point and a half before you consider refinancing. But when it gets to that point, , there’s a lot of refinancing going on,

[00:06:33] Vicki Markussen: right? It’s kind of like the stock market in general, right? But when do you go?

[00:06:38] Vicki Markussen: Is it going go lower? Is it going higher? Perfect. Yeah. So you have to play that market, if you will. But yes, there is always refinancing that is happening. I think the other piece, as we talk about affordable housing, it’s the full. Spectrum, right? So most people start out renting, and then they go into homeownership and then potentially senior living, or at least a type of home that they can age in place was the old terminology.

[00:07:05] Vicki Markussen:. And so looking at our affordability in our supply and demand, what are you seeing and thinking in terms of how we keep our housing market moving. .

[00:07:15] Damon Olson: We’re seeing the baby boomers that are looking to, they need alternatives and they need an option before they’re going to exit the home they’ve lived in for many years.

[00:07:26] Damon Olson: And as those alternatives or options become available and it doesn’t happen overnight, but as it evolves and progresses in our markets, That is one thing that will help free up some inventory, whether it’s for a first time home buyer or a step up home, from somebody coming out at their first time home.

[00:07:49] Damon Olson: So that needs to happen in order to free up inventory not, and that’s not counting new construction. I don’t know how much new construction is a first time home for many. I would say it’s, there’s probably a smaller percentage. But there’s a lot of existing inventory out there that like to think that where the baby boomers are at, and as alternatives become available, it’s going to free up.

[00:08:14] Vicki Markussen: And we’re also, you gave me the statistic as we were talking about this interview. So in the year 2000, there were 15 million fewer people that was in the United States. In the United States. Yeah. So what does that tell you about who we’re trying to house? Yeah,

[00:08:31] Damon Olson: The, I think the millennial generation is, Second biggest to the baby boomer generation.

[00:08:39] Damon Olson: Yep. There’s no doubt there’s, we’re adding people, period. Yeah. No matter what the source, so there’s a demand for housing and you can’t deny that has to have some type of impact.

[00:08:50] Damon Olson: Yeah. 15 million was a large number. yes. Just thinking back to US history in high school, and I won’t say how many years ago, I remember the population in the United States, then that statistic was 250 million people. Yeah.

[00:09:07] Vicki Markussen: And then you have an interesting component to it as well, because, so you have this huge baby boomer generation, and then you have a little bitty Gen Xers and then you have the huge millennials and we’re trying to ho house, if you will, two very large generations as the millennials are coming into apartments and home ownership,

[00:09:27] Vicki Markussen: and it’ll hit a sad to say tipping point, that movement will happen much sooner if we’re able to. Seniors, right? Because then they will say, okay, it’s time to vacate my large three-bedroom home. And this transitions a little bit into the other conversation you and I had about what type of home people are seeking.

[00:09:45] Vicki Markussen: Not just the baby boomers, but also the millennials. What are they looking for in terms of maintenance?

[00:09:50] Damon Olson: Low or, no maintenance. . I don’t know that No maintenance is a term, but it’s really. They want to be able to come and go and not be tied down with the, all of the responsibilities of, that home ownership brings.

[00:10:04] Damon Olson: Or the expense, the maintenance expense. Something goes wrong. lot of times if you’re renting, it’s in your lease that’s not your responsibility. So I think they appreciate that. The other thing that I’ve personally experienced is with younger working professionals, they’re not necessarily of the mindset to stay in one spot or with with one employer for 30, 30 plus years maybe like some of the older generations have, right? Mm-hmm. Opportunists, they’re they’ll relocate if necessary. So I think maybe the mindset of not getting into this big commitment. at least for a certain period of time or early on that also is where the renting appeals to.

[00:10:50] Vicki Markussen: right? And you and I were brought up in the mindset of you buy a home because you start to build that equity, which is equates to wealth and your ability to borrow and everything that comes with it. So it’s just a different mindset. And I as I’ve talked to people building apartments, and I’m sure you’ve seen it too, that you end up with these multi-generational apartments because you have the seniors who don’t want the maintenance and you have the millennials, don’t want the maintenance.

[00:11:21] Vicki Markussen: Right. So you end up with these multi-generational complexes. So the, I’m going to shift us a little bit to the other type of real estate, which is commercial. Yes. So we have remote working that is happening. It’s no secret that some of these large office complexes are vacant because they’ve moved their workforce to remote.

[00:11:41] Vicki Markussen: What are you seeing in terms of real estate for commercial?

[00:11:44] Damon Olson: There is when I say surplus, I wouldn’t say an overwhelming surplus, but there is a surplus of office, available office space. I can speak specific, specific to our market, but then. As I read and listen to other commercial real estate podcasts, I’ve heard, larger markets.

[00:12:04] Damon Olson: So there’s a surplus of office space and what are we going to do with it? Mm-hmm. . So there’s been a lot already, a lot of community or co-working office space created. They’re thinking outside the box. It’s not necessarily the immediate mindset that it gets converted to multi-family. Because, not every commercial building is even, are you even able to adapt?

[00:12:27] Damon Olson: But yeah, or for startup businesses, that type of thing. So it’s just rethinking the layouts and maybe the overall use of the space. To create some variety, make it attractive. And of course it’s slow, but Sure. There’s employers that are employees are coming back saying, Hey, it was nice to work from home for a while, but.

[00:12:50] Damon Olson: I, I can’t take this anymore. I need to work from, I need to work from a, from an office space.

[00:12:57] Vicki Markussen: So, and have the social interaction that comes with it and Yeah. Yeah. And I was sharing with you, I had a conversation with a company that is finding itself with surplus space and saying, is there opportunity around a community, it’s someone who works from home who wants to come in for a couple hours and like maybe it’s a monthly rent to just have access to space. And so yeah, different concepts being explored and who knows what a year from now is going to possess.

[00:13:27] Vicki Markussen: Yeah,

[00:13:28] Damon Olson: I think it’s a great concept. It’s a great idea and I can’t imagine what the networking opportunities it could provide. Yeah. Just crossover and communication and the socialization end of it. Yeah.

[00:13:43] Vicki Markussen: It’s really hard to brainstorm with people when it’s your singular brain, . Right, You have been listening to Biz Cast Greater Lacrosse with my guest, Damon Olson. I’m Vicki Markussen. We’ll catch you next week.