Milwaukee Housing & Rental Trends

The 2017 Housing Market continues to show strong growth with low inventory levels, a median sales price increase of 5.2%, and a quarterly increase in new homes sales of 3.2% over Q1 in 2016, according to data provided by the Wisconsin Realtor’s Association.

What is interesting is how this ties into the rental market in Milwaukee. We came across some date courtesy of ADOBO that provides an interesting picture of how the market is shaping up.   

Specifically in Milwaukee, almost 60% of the city’s residents are renting these days. In 2011, data shows that just 57.2% of residents were renters, which increased to 58.7% in 2012, then fell slightly in 2013 and 2014 to 58%, before rising 1.5 percentage points for 2015. The increase in renting coincides with the decline in housing we experienced during the great recession as people moved from their homes into rentals. After all you have to live somewhere, so it makes sense that those who were burdened by housing shifted to apartments. 

As a result of the economic downturn, the cost of home ownership also decreased during the same time frame. The average mortgages and associated monthly homeownership costs have fallen from $1,399 in 2011 to $1,257 in 2015 — a decrease of nearly 1%.  “This decrease in home ownership costs clearly made owning a home more attractive and has certainly contributed to the healthy increases in the housing market we are currently experiencing.” said David Belman, President of Belman Homes, Inc. This is due to lower interest rates and reduced home pricing.

Due to greater demand for rentals, monthly costs for renters in Milwaukee rose from an average of $774 per month in 2011 to $802 per month in 2015. This is nearly a 3.6% increase, which is well above cost of living and GDP growth during that period. The jump in average rent lead to nearly 57% of renters being cost-burdened. Cost-burdened is defined as paying 30% or more of their income on housing costs. When you compare that to a typical homeowner, only 34.4% of homeowners with a mortgage face that burden. “These numbers are slightly above national averages” according to Sam Radbil of ABODO. 

If you start to factor in the creation of equity or wealth from homeownership, it really makes sense for one to own a home if you can swing the payment. A $400,000 loan will save you $6,160 in Federal and State tax deductions in one year! That is around $580 a month in reduced tax liability for a new home.   

“If you factor in the equity you are building with a mortgage compared to rent, a $400,000 home with a 30-year loan will accumulate $7,044 in principal in only one year. If you are able to afford the down payment you should absolutely consider owning a home. There are so many financial benefits to ownership” explained Belman. 

“Milwaukee is an extremely interesting city. Even as one of the oldest cities in the Midwest region, Milwaukee is still viewed as a very much “up and coming” city. With a new basketball arena for the Milwaukee Bucks, new startup businesses growing in the city and a ton of new development of luxury apartment buildings, the city has a lot to offer for incoming residents and/or locals looking for a new place” added Ardabil. 

More and more businesses are moving their operations to Wisconsin and unemployment rates are now below 3.4%. That makes Milwaukee an attractive destination for people to make their permanent residence. The city offers abundant nightlife, dining, entertainment and close proximity to lakes, parks and other nature. It is easy to see why more people are choosing to rent or live in Wisconsin.  

Comparison of renting vs. home ownership by age:

Click here for more information on the study.