National report shows city of Madison leads Midwest in housing stock growth

The city of Madison is a Midwestern leader in addressing the housing shortage over the past two decades, according to a new housing report.

Storag Cafe, a company that manages storage facilities nationwide, analyzed more than 489 cities with populations over 55,000 between 2005 to 2023. The latest report ranks each city based on local inventory growth across various residence types. 

The report shows housing in the state’s capital city growing by 37 percent since 2005. The city had 138,000 new units last year.

Urban planning professor Kurt Paulsen of the University of Wisconsin-Madison told WPR’s “Wisconsin Today” that Madison is a tech hub with a university, which drives housing growth.

“It’s also driven by companies like Epic that employ thousands of people,” he said.

Paulsen added that while the report tracked the number of units produced, it didn’t account for the growing number of people coming to Madison for housing.

“My own study, Falling Behind, showed that Dane County actually underproduced about 1,000 units per year during this time period,” he said. 

The StorageCafe report found that over those 18 years, far more large apartment buildings or multi-family developments were built instead of single-family homes and duplexes, condos and townhomes.

He said cities like Madison have reformed zoning ordinances to allow for more housing over the past 10 years. 

Meanwhile, cities like Green Bay, Racine and Milwaukee ranked near the bottom of the report.

“Job growth in these communities, while it has been positive, has been a lot slower,” he said.

In the case of Milwaukee, Paulsen said, the overall city population has declined over the last 20 years.

Paulsen shared further takeaways from the report, including why southern states like Texas are leading the nation with overall housing inventory growth. 

The following has been edited for clarity and brevity.

KAK: The report shows that nearly half of the top 50 cities for overall housing inventory growth are in Texas. What’s happening there? 

KP: It’s multiple factors together. But primarily in Texas, zoning rules, building codes, environmental standards, are much weaker, much lower, and it’s just a lot easier to build. We like to say places that are expensive don’t build a lot of housing, but places that build a lot of housing are not expensive. 

Texas makes it really easy to build a lot of housing. The other reason is that there’s just a lot of migration patterns to the South and to the West. It’s January and you look outside, how cold it is in Wisconsin. There was a study a few years ago that showed that for county population growth rates, average January temperature was the most important predictor.

KAK: This report shows that housing inventories have increased in 91 percent of the cities that StorageCafe analyzed. But this growth hasn’t brought down housing prices. What’s happening?

KP: We are building lots and lots of housing, but we are adding jobs and households faster than we can build housing units. Even though we’re building a lot, we’re not catching up in order to bring down the price of housing.

First of all, you would need construction costs to go way down, but unfortunately, they’ve gone up a lot in the last five years. Second, you would need to build enough housing so that you could have a sustained vacancy rate of 2 percent for single-family and 5 percent for multi-family to bring down rents and housing prices. 

Imagine your friend is two miles ahead of you on the road and is driving 70 miles per hour and you’re going 60 miles an hour, and you want to catch up. You accelerate to 68 miles per hour, you’re going faster, but you’re still falling behind. That’s really where we are. We have such a hole that we’ve dug ourselves out of not building enough housing after the Great Recession. We’re playing catch up.

KAK: What do you see in the future for housing construction of all different types, for Wisconsin?

KP: We’ve seen the Legislature and local leaders really react to this housing crisis with all hands on deck, with changes to zoning, with over $500 million of funding. As we watch those play out, we are starting to see in communities that people are recognizing we need to allow more housing and a greater variety of housing. 

But of course, we have some headwinds. Those headwinds are interest rates, construction costs. Then the wild card is what immigration enforcement will do to the labor supply in construction. A lot of people are predicting that housing construction in 2025 will be slow. A lot of people are kind of waiting patiently to see what happens.

KAK:  I’m curious about communities being welcoming to multi-family housing, being open to having apartment buildings in their neighborhoods. What do you see happening there with that issue?

KP:  It’s definitely a mixed bag, and it goes community by community and neighborhood by neighborhood. We’ve all seen videos and read stories about when the neighbors and the “not in my backyard” (people) show up to say, “No, we don’t want this housing.” But we’re seeing a lot of communities really take leadership to say, “Listen, we are creating all these jobs and want a vibrant economy.”  

Then, you have to start thinking about the person who serves your coffee or takes care of your children, the teachers, the nurses, the police officers who serve your community. If they can’t afford to live in your community, eventually you’re just not going to have those services. Communities are starting to have this conversation that says, “If we are creating all these jobs, we need to take the housing that goes along with it, and that means multi-family.”