MADISON, Wis. — Madison’s home prices jumped higher than any other city in the nation this spring, according to a new report.
The pandemic created a roller coaster in real estate. The skyrocket in remote work caused some people to need more space at home, or have the ability to live wherever they want.
Some of those pandemic pressures have eased, plus interest rates have risen. In some parts of the country, it’s gotten a bit easier to buy a house. That may not be the case in Madison, where home prices continue to rise rapidly.
A monthly report by real estate analytics firm Black Knight found that from April to May, home prices jumped 1.65% in Madison. That’s higher than anywhere else in the nation.
The reason for that rise is simple: high demand and low supply. It’s been the refrain repeated by realtors for years in Madison.
“Land is so scarce in Madison to begin with,” said Lindsey Koch, a real estate agent with Realty Executives. “Listings are down over 20% from last year… it’s like, can inventory get any lower?”
Kenny Millman, a real estate agent with Matt Winzenried Real Estate Partners, said that high demand and low inventory have caused homes to sell for over asking price nearly every day.
“I had a four bed, two bath, 2,500-square-foot [home], listed for $480,000,” Millman said. “We wrote at $550,000, and they said we weren’t even close. Then it ended up closing for $625,000.”
Bidding wars have become commonplace. Millman said he’s represented clients who were competing against 40 other buyers. He bought a condo, and even as a realtor, he had to write offers on four properties before his fifth was accepted. Koch has represented clients with 50 offers.
New housing development has grown in surrounding cities like Fitchburg, Sun Prairie, McFarland and DeForest over the last decade. However, that trend is currently stalling. That same report from Black Knight shows new single-family construction is only at about half the level it was pre-pandemic. Both Millman and Koch are in the process of building homes.
The city assessor’s office said the average single-family home here is valued at over $400,000. That’s a 27% jump in two years. Millman and Koch said the median home price is even higher than that, likely approaching half a million dollars.
Prices that high mean a starter home is unattainable for many people.
“What I’m telling most folks who are in that position, that want that $200,000 to $300,000 single-family home in Dane County, you’re probably not going to find it,” Millman said.
He recommended people start off small, maybe with a townhome or condo. He said prices aren’t dropping, so at least they could build equity, and after a few years, upgrade to a single-family home. He and his wife just did that exact thing.
The low inventory could be pushing out Madison natives. Many of Millman’s clients are moving to Madison from other parts of the country.
“We’ve gotten really good at FaceTime showings,” he said.
Madison’s booming population is outpacing the available housing inventory. Granted, that’s because Madison is known as a great city.
“It’s this little town, but it has everything,” Koch said. “People love living here.”