Madison’s economic growth has pushed the demand for housing to record numbers.
Madison was one of the few metro areas that had the biggest gains in terms of in-migration due to a strong local economy, according to the latest Milken Rankings. The capital city jumped to No. 34 in 2021 from No. 93 in 2020.
Madison entered 2021 with only about three weeks of residential inventory on hand in Dane County — far less in some neighborhoods, said Stark Company Realtors President David Stark. Demand has been extremely strong early in the year with most properties selling between a day or week, usually at or above the asking price and often with multiple offers.
The median residential sale price rose about 6.5 percent in each of the past two years, now at $315,000 for a single-family home and condo combined.
Stark attributes the demand for housing to economic growth among millennials. Milken ranks Madison No. 10 for high-tech GDP from 2014-2019.
“Madison, and the entire Dane County Metro area, have been growing briskly lately, the fastest in the state in my understanding,” he said. “In the past few years, we have become a highly desirable destination for younger workers in technology, medicine, and information technology, bio-sciences and more.”
Racine County, however, was noted as one of the biggest losers in the Milken ratings. Lake County-Kenosha County, IL-WI ranked fell to No. 154 this year from No. 96 in 2020.
Bear Realty of Burlington Vice President Bradley Lois offered two reasons for Kenosha falling in any sort of ranking: national media attention surrounding the civil unrest in the area over the summer, and high demand from residents leaving Illinois.
“The upward pressure that has put on our supply here in the last 12 months has made it even more difficult to purchase a home in Kenosha,” Lois said. “Looking forward, there is a lot of demand and there are facilities under construction that are going to require jobs to be filled. If there was ever a ripe opportunity for a developer to build new housing, the Kenosha market sure is presenting a great opportunity for growth!”
Lois, also a broker with Fox River Property Management, said throughout the pandemic clients have made the move to southern Wisconsin from Illinois because the Badger State is more affordable for those who can work from home, more businesses were open during the pandemic, and Wisconsin offers more amenities, such as lakes, for people with new flexible work arrangements.
Meanwhile, Madison could face a similar problem in keeping up with the housing demand.
With such low inventories, the competitive market doesn’t ease up until the price goes over about $800,000, Stark said.
“New construction is helping, but $400,000 is about the absolute floor for single-family new construction now, and condos are even more scarce, even though they are somewhat more moderately priced on average,” he said. “We continue to see new apartments being built as well, but there is widespread agreement that we need to build more if we’re going to maintain adequate housing into the future.”
See the Milken report: https://milkeninstitute.org/sites/default/files/reports-pdf/Best-Performing-Cities-2021.pdf