The State Of Housing In Madison

The STate OF Housing in Madison

Housing production in Madison dropped during the Great Recession and has never caught up. Today, job opportunities in and around Madison grow faster than the growth of new housing in the area. This imbalance means that many people cannot live near where they work and must commute, contributing to traffic congestion and carbon emissions. Those who do live near where they work face low vacancy rates, stiff competition, and rising rents.

Affordable Housing

Households who are spending more than half of their monthly income on housing are considered extremely cost-burdened. Madison’s efforts to provide affordable housing have contributed to a lowering rate of extreme cost-burden, but the Dane County rate is still higher than the national average, according to the Dane County Housing Needs Assessment. The report concludes that Dane County needs 800-1000 more affordable units just to bring that rate down to the national average. A standard metric for housing affordability is that a housing unit should cost 30% of household income or less.

Housing that is affordable without government subsidies is considered naturally occurring affordable housing. This type of housing can arise through the process of moving chains, which occurs when high-income households move into newly built market-rate housing and free up older housing, which becomes more and more affordable as it depreciates in value. According to the 2020 Housing Snapshot Report from the DPCED, Madison has fewer expensive units than households able to afford them. This suggests that, if more new market-rate units were built in Madison, some high-income renters would move out of lower-priced units and into more expensive units, freeing up the lower-priced option for someone else.

Housing units can also be made affordable through subsidies. Subsidized affordable housing options in Madison currently include 742 units of low-rent Public Housing, 115 units of Mulitifamily Housing (WHEDA), and a 24-unit Project-based Section 8 complex. The CDA also issues housing vouchers for around 1600 Madison households renting from participating landlords.

Accessory Dwelling Units (ADUs)

Accessory Dwelling Units (ADUs) are an important, but often overlooked, piece of the pro-housing movement. Commonly referred to as 'granny flats', ADUs are small, stand-alone units built on the same lot as a single-family home. These buildings can provide homeowners the opportunity to live in close proximity to an elderly family member or provide a place for extended family to stay. Alternatively, the owner can choose to rent out ADUs to others in the community. Either way, the construction of ADUs increases the supply of housing in a neighborhood while also providing an efficient use of existing land.

On December 7th, 2021, with the support and help of Madison is For People the Common Council approved a measure making it easier to build ADUs across the city. Along with increasing the maximum allowable size of ADUs to 900 square feet from 700, this ordinance revision changed ADUs from a 'conditional use' to a 'permitted use' removing some unnecessary boundaries and red tape for ADU construction. In practice, this means homeowners who wish to build an ADU can do so as long as their proposal is within the guidelines of the zoning code. They no longer need to go through the intensive and oftentimes unpredictable conditional use approval process.

The Future

While only a handful of ADUs exist in Madison as of the end of 2021, this new ordinance revision will undoubtedly lead to more ADUs cropping up over the coming months and years helping to alleviate the city's housing shortage. Still, more can be done to incentivize ADUs. Policy changes like removing parking minimums and reducing zoning restrictions for properties with an ADU should be pursued by the City of Madison to further encourage ADU construction.

Gentrification and Displacement

As Madison grows, it changes. Many neighborhoods have seen demographic changes that indicate that former residents have been displaced. In 2019 the City of Madison released a report titled Equitable Development in Madison, which analyzes displacement in Madison’s neighborhoods. The authors identify Atwood/Milwaukee/Darbo as an area that has seen displacement: from 2000-2017 median rents increased by 50% and housing prices doubled. With that change, the residents changed, too. In 2017, 63% were college graduates, up from 45% in 2000.

The Tenney Lapham neighborhood appears to be changing with significant new development along East Washington Avenue. However, it has seen median rents increase at a slower rate than the Madison average. The paper's authors point to new development as a reason rents are staying relatively low in the area. They note that the most affordable 60% of rentals in Tenney Lapham increased rent at a lower rate than the citywide average. New development has freed up older units, which now have to keep prices low to remain competitive. According to the report, Tenney Lapham’s zip code (53703) has one of the highest vacancy rates in Madison, indicating that supply in this neighborhood is rising along with demand, keeping rent increases at bay.

Often, new market-rate housing is seen as a precursor to gentrification, but we can see the evidence in our city that that’s not the case. We need the new housing to stave off the displacement that often comes with changing neighborhoods.