Market Mastery: What to Know About Dane County Real Estate

To better understand where our local real estate market is headed, we need to understand where it has been. In this post, we’ll be covering Dane County Real Estate from a historical perspective, as well as cover a few recent trends. 

If you want the quick recap of this report, check the bottom of each section for the summary. 

What you’ll find in this post:


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Explanation of Data

Is it possible to predict the future of the real estate market? Of course! Is it possible to do so accurately? Well now, that is the million dollar question…

While no data can perfectly predict the future, I believe that the right data can get us close. At the very least, the right data will show us past AND developing trends.

So what is the right data?

For local real estate, nothing currently beats the Multiple Listing Service (MLS). As annoying as it is to have local real estate data locked behind a paywall, it is what it is. We use all Single Family(SF) listings, going back to 2000, and sort the data into useful bits. For this report, we are using all of Dane County OUTSIDE OF Madison, Wisconsin.

Madison represents roughly 48% of the Dane County population. It is by far the densest area of Dane County, and therefore, needs to be studied separately. We will have a followup post just for Madison. 

The most useful bits of data, from my experience, are those that show us CURRENT market activity. These include: list date, list price, accepted offer date, and expired date. Other metrics, such as days on market and sold price, can also be helpful. However, I have found that these lag behind, causing us to look more at the past than at the present. 

Once sorted, we use this data to determine Total Active Inventory (all SF homes currently available for sale) as well as track Accepted Offers by date. Doing this allows us to determine the Supply/Demand ratio for the market. 

By dividing Inventory (supply) by Accepted Offers (demand) we get as clear a view as we can of market trends/dynamics. When the ratio is high (high supply, low demand) it is considered a “buyer’s market” and prices tend to fall. When the ratio is low (low supply, high demand) it is considered a “seller’s market” and prices tend to rise. 

Following the Supply/Demand (S/D) ratio, we can get a jump on where prices are likely to head. 


  • We use local MLS data of Dane County (minus Madison) Single Family homes.
  • Total Inventory and Accepted Offers are the two most important metrics.
  • By dividing Inventory (supply) by Accepted Offers (demand) we get as clear a view as we can of market trends/dynamics.
  • The S/D ratio gives the best view into the future of prices. 

Annual Market Flow

For Dane County (and Wisconsin, in general) the real estate market flows according to the season. Take a look at the following chart. 

The blue is Supply and Demand (S/D ratio) mentioned above. The black line is Total Active Inventory. Both are based on a 30 Day Moving Average, meaning each data point represents the average of the 30 days preceding it. 

The S/D ratio peaks during the winter and bottoms out during the spring. Total Inventory peaks in the summer/early fall, and bottoms out during the winter. This gives us our first view into the future: Where inventory goes, so goes the S/D Ratio. If we see inventory declining, we “know” that power will be shifting to sellers. If we see inventory rising, we “know” that power will be shifting to the buyers. 

This also tells us when the best times to buy/sell are. The best time to buy is in the dead of winter, preferably before the 1st of the year. (Many sellers will “expire” their listings at the end of the year.)  The best time to sell is early-mid spring since inventory is still low.

Now let’s see how prices relate to inventory… 

List prices almost perfectly mirror inventory levels, just with much smaller swings. List prices typically peak in January (when inventory bottoms), and slowly decline throughout the year (as inventory grows). As inventory shrinks, prices rise and as inventory rises, prices shrink. 

What we are seeing with the Annual Market Flow is exactly what we see in the Long Term Market Flow, only on a smaller scale. Let’s take a look now at the movements of the Long Term Market Flow.


  • S/D ratio typically follows inventory. 
  • Winter is the best time to buy and Spring is the best time to sell. 
  • List prices peak between January-March and fall throughout the year.
  • List Price and Total Inventory have an inverse relationship. 

Long Term Market Flow

For the Long Term view, we’re going to look at similar charts. However, we now move to a 360 day Moving Average.

The same lessons we learned about the Annual Market Flow hold true when looking over the long term view. The difference here is simply timetable. Our Annual Market Flow cycles with the seasons. Our Long Term Market Flow cycles with the economy. 

What I found interesting when first seeing this chart, is that inventory and S/D Ratio were both sending a clear message well in advance of the previous housing crash. Knowing this, can we identify a danger zone for both inventory and S/D Ratio?

Looking at historic inventory levels, it appears that a 360 Day Moving Average of 1,250 is a pretty strong signal for BOTH the way up and the way down. Price continued to rise, but began to plateau shortly after crossing above the 1,250 mark in late 2005. Inventory peaks in early 2008, which corresponds with the beginning of the price crash. Inventory remains high as prices continue to fall. Then, prices begin to consistently rise once we see inventory cross below the 1,250 mark. 

However, inventory might not always tell the whole story. After all, our County’s population is growing and new homes are being built every year. It is possible that a rising population will mean that the danger zone for inventory could be slightly higher today than in the past. 

That is where S/D Ratio comes in. 

Using the S/D Ratio, we can get a picture of Total Inventory as it relates to buyer demand. What this chart suggests, is that a ratio above 300 is a clear danger zone. An S/D Ratio for 300 tells us that there is 1 accepted offer for every 300 SF homes currently on the market. Compare that with today, where we’ve got an S/D Ratio of nearly 75, the lowest in our recorded history.  

I would argue that the velocity at which the ratio moves is also important to consider. The S/D ratio didn’t just move above 300 back in 2006. It took off like a rocket around late 2005, and went from around 175 to 325 in about a year. 


  • The relationship between inventory, list price, and S/D ratio all hold true over the long term. 
  • Inventory and S/D Ratio levels predicted the housing crash more than a year in advance. 
  • Inventory above 1,250 and S/D Ratio above 300 is the danger zone for prices.
  • The faster that inventory and S/D Ratio move, the faster prices move in the opposite direction.

There are a few obvious trends as you look at the Long Term View. Here are a few:

  • Declining Total Inventory since 2009
  • Declining S/D Ratio since 2011. 
  • Rising prices since 2013.

What I can’t help but notice, however, is that Inventory and S/D seem to be leveling off. Let’s take a look at the 30 Day Moving Average since 2010.

Normal market dynamics would suggest to me that we are due for a rise in inventory. In fact, that is exactly what I expected for 2020. What I did not expect, was COVID. 

Notice that peak in inventory every single year? Well… We didn’t get it this year. Mid-March is precisely when listing begin flooding the market, and also precisely when the state of Wisconsin shut down due to COVID. This leaves us at our lowest Total Inventory after 8 months of the year. This also leaves us at our lowest S/D Ratio in history. 

Let’s take a look at what happened to New Listings and Accepted Offers. 

Look at those first 3 months of 2020. We saw more listings than both the 3 and 5 year averages. We also saw more Accepted Offers for the first two, but then March shows the first sign of the market being affected by COVID. 

April confirms this pattern where we see both buyers and sellers spooked. Both continue to be weary of the market in May, but then June sees Buyers jump back in to normal levels. The last two months have seen New Listings get back to normal levels for the time of year. Accepted Offers, however, has risen well above the 3 and 5 year averages. 

So it appears that buyers are making up for lost time, while sellers are settling back into the normal range. It is possible that sellers will react to the surge in buyers by producing a late surge of listings. However, I doubt that we see a huge surge in listings once things cool down. This means we will likely begin 2021 with the lowest Total Inventory on record. 

My expectation? 2021 will bring a flood of New Listings and confirm that we have reached a low point in Total Inventory and are beginning to reverse course. I doubt we’ll see enough listings for prices to be immediately affected. However, it is entirely possible that once listings begin to surge it will become a self-fulfilling prophecy.

My speculation? Sellers, who have enjoyed over 7 years of increasing power in the market, may wish to sell before the dynamic flips on them. A rush of sellers trying to beat the changing dynamic will  inevitably lead to the change they hope to avoid. Once things turn, they’ll turn hard.  


  • Inventory and S/D Ratio levels appear to be leveling off. 
  • Accepted Offers and New Listings were both significantly below the average for April and May. 
  • Accepted Offers have been surging since June. 
  • New Listing have been back at normal levels for the past 2 months.7


So what is it you really need to know to understand Dane County Real Estate? I’ve got the main lessons of each section listed out below. 


  • Inventory and Accepted Offers are the most important metrics to consistently follow. 
  • Using these, we can get the Supply/Demand Ratio to determine overall market activity. 

Annual Market Flow

  • Winter is the best time to buy and Spring is the best time to sell. 
  • List prices peak between January-March and fall throughout the year. 

Long Term Market Flow

  • Inventory above 1,250 and S/D Ratio above 300 is the danger zone for prices. 
  • The fast that inventory and S/D Ratio move, the faster prices move in the opposite direction. 

Recent Trends

  • We’ve been in a seller’s market since 2013.
  •  Inventory and S/D levels appear to be leveling off.
  • Accepted Offers are surging, while New Listings are merely back to normal levels. 

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