Wisconsin home prices have climbed faster than income in recent years, report says

Home prices in Wisconsin have grown faster than incomes in recent years, creating challenges for prospective first-time homebuyers.

That’s according to a new report released Wednesday by the Wisconsin Policy Forum. The report examined the change in incomes, home and rent prices from 2017 to 2022.

It found that the cost of owner-occupied housing in the state has far outpaced income growth, while median incomes among renters have kept pace with rising rental prices. However, the share of renters spending more on housing than what’s generally deemed “affordable” has also increased.

“Whereas incomes among renters and homeowners rose during that period at roughly the same pace, the cost of buying a home rose much faster than the cost of renting a home,” said Joe Peterangelo, a senior researcher for Wisconsin Policy Forum and the report’s lead author. 

The rise in home costs is tied to declines in housing construction following the 2008 Great Recession, the report said. 

Since 2010, according to the study, the number of households in the state has increased by more than 211,000, but less than 145,000 housing units have been permitted, creating a 67,000 deficit.

“That does have an effect on prices because there’s more competition for the same units,” Peterangelo said. “That just drives the price up for housing overall. Of course, that’s not the only factor, but it is one factor that we are able to see in the data.”

Home buying market most impacted

From 2017 to 2022, the median home sale price in Wisconsin increased by more than 50 percent, while median household incomes in the state increased by only 19.7 percent, the report states.

Peterangelo said the trend of home prices outpacing incomes is especially concerning for younger aspiring homebuyers.

“Homeownership is seen as one of the best strategies for building wealth,” he said. “And because the market is so tough right now, it limits people’s opportunities to get started in the homebuyer market, and it postpones their process of building that equity.”

Six of Wisconsin’s 72 counties had median home prices that were at least 4.5 times higher than their median household incomes in 2022, the report said. They were Dane, Door, Vilas, Sawyer and Burnett counties. 

Another seven counties had median home prices that were four times higher than median household incomes as of 2022. They included Barron, Florence, Iron, Oneida, Washburn, Ozaukee and Walworth counties.

“My interpretation of this data is that a number of the rural counties in the north that are on this list do have a lot of vacation homes,” said Peterangelo. “That could have a big effect on what the median sales price is.”

But Dane County is less influenced by vacation homes, and has a high median household income of $84,297, yet its median home price is 4.6 times higher. 

“Housing is very expensive in Dane County, the median sales price was $385,000 in 2022, and this is a county that has a lot of growth that has a lot of home sales occurring,” Peterangelo said. “It’s definitely one that stands out in this data as an area of concern.”

Wisconsinites facing rent burden increases

While the cost of owner occupied housing has been dramatic, the report indicates changes in the state’s rental market were less pronounced.

It found median gross monthly rents increased by 21.1 percent from 2017 to 2022, while median household incomes among renters rose by 22 percent.

Over the same period, however, the share of the state’s renters spending at least 30 percent of their income on housing rose from 43.6 percent in 2017 to 45.4 percent in 2022, according to the report. And in Milwaukee and Dane counties, more than half of renter households spent more than 30 percent of their income on housing in 2022.

Peterangelo said a high number of low income households in Milwaukee County is a likely driver of the rent burden numbers there. In Dane County, he pointed to high prices.

“The newer data we’re seeing on the rental market is indicating that things have gotten tougher in the last couple of years,” Peterangelo said.