Mike and Cherrie Johnston  did everything right in preparation to buy their first home. They had secure, well-paying jobs and good credit scores. They saved money for a down payment. They got pre-approved for a loan from their bank. And yet, they couldn’t pull it off.

"We wanted to buy a starter home in Shorewood. So does everyone else, it seems," says Cherrie.

The couple wrote offers on three homes – two of which they went into stressful price wars with other interested buyers. In both cases, they offered thousands of dollars over the asking price, and still didn’t get the house.

"We had heard it was a ‘buyer’s market’ and thought we would easily get a home," says Cherrie. "But the market is nutty."

The Johnstons eventually bought a home in Whitefish Bay this past winter. 

"We love the house," says Cherrie. "But it’s not the ideal location for us."

The state of the real estate market is difficult to pin point. Loan rates are low, but banks are picky about who gets them. Sellers are selling, but not like they were years ago.

To help make sense of the current housing market in Milwaukee, we checked in with Toni Spott at Shorewest to get the current low-down.

OnMilwaukee.com: In general, how is the housing market?

Toni Spott: There is a complete shortage to sell on the market. Milwaukee is down 17 percent down from last May in the inventory of homes to sell. In 2011 we had a normal amount of homes on the market and in 2012 there was a 15 percent shortage.

Because of the shortage, there is a feeding frenzy. It’s the high market all over again. Buyers are lining up to write offers at over the asking price in most cases. This is happening everywhere.

OMC: So it sounds like a "buyers’ market?"

TS: The buyers are the biggest beneficiaries of this market, be they first-time home buyers or investors. It’s a win-win situation. Investors are just buying up everything they can get their hands on in the lower price ranges.

OMC: So did the market bounce back from where it was?

TS: Because pricing took such a nose dive in the last few years, when we say prices are going up, it’s not a lot at all. It’s small increment and we are nowhere near the normal market pricing. Sellers may be selling, but they are not seeing huge windfalls.

OMC: How are mortgage rates?

TS: Rates are at a historical low, in some instances, the two percent range. But, they are ow moving into the four percent range. But four percent is still an outstanding rate. With these rates, you can’t lose.

OMC: Which neighborhoods are hot?

TS: They are all hot if the house is priced right. Bay View continues to be a fast-moving neighborhood as well as most of the neighborhoods along the lake.

OMC: What advice do you have for sellers?

TS: It’s always a good time to sell if it means moving on with your life. Don’t let a home sale keep you from your dreams or moving to the next segment of your life. Life is short; move on.

OMC: Are there fewer foreclosures then, say, a few years ago?

TS: Yes, there are fewer and fewer. As I mentioned earlier, investors are snatching them up like crazy. The banks are being ever so careful who they give their money to these days, so I don’t think we’ll be seeing a fresh crop of foreclosures in a long time.

OMC: What advice do you have for first-time homebuyers?

TS: My advice to first-timers is always the same: please come to my office and meet for a buyer-counseling session. No pressure from me ever. I walk them through what writing an offer will be like and what to expect throughout the process, from writing to owning. They need to have all of the facts to have a comfort zone. Don;t let anyone pressure you into buying a property. Go with your gut feeling and a good real estate agent. 

OMC: Should potential buyers get a pre-approval for a loan from the bank?

TS: Yes. The banks may give you this amazing price, but if you know in your heart it’s really too much, well, go with gut. Don’t be house rich and life poor.

OMC: Any thoughts on what will happen to the Milwaukee real estate market if the Walker budget passes and dissolves the residency requirement?

TS: I seriously don't think there will be a mass exodus. People may say they will, but it's a big life change to just pull up roots and go.

OMC: Where do you see the market going in the next year?

TS: I see the next year as a continuation of the past year. I am hoping it will get a little less crazy or at least calmer. But I do see the home sales continuing to gain momentum, especially with the interest rates so low.