WEST BEND — Wisconsin’s housing market is falling behind the demands of a growing workforce, according to a report from the Wisconsin Realtors Association, and local areas are experiencing a shortage of affordable housing options.
The WRA’s report “Falling Behind,” released in late 2019, analyzed how the growth of the housing market compared to growth in the population and workforce in Wisconsin. Generally, the study found that much of the state was not building homes as quickly as the population is growing, and the housing that is available often carries an average price tag higher than average incomes can affordably pay.
Locally, area officials are aware of the issue, but what and how much is being done about it has varied.
“It is something we’re beginning to have a dialogue on,” said Washington County Executive Josh Schoemann. “We’ve never taken a proactive approach before, and we’re starting to look at what that could look like.”
He said county officials have been in touch with economic development professionals, municipal leaders and housing consortiums, trying to formulate a strategy.
In Waukesha, Community Development Director Jennifer Andrews said the city is actively working on the housing market issue. She said the city completed a housing study in 2019 that showed shortages across all housing types and almost all price points, though the existing stock of housing in Waukesha does include many different types and prices of housing.
“One of the city’s (Waukesha’s) challenges is that its borders are fixed and there is very little undeveloped land left,” Andrews said. “This makes the challenge of increasing the number of housing units more difficult, but also has made the city more measured in its decisions about new housing.”
According to the WRA report, Washington County has actually kept up in the amount of its housing supply. Washington County did not show a deficit in construction versus population growth from 2006 to 2017.
In Waukesha County, the report showed a significant deficit; the number of households in the county had gone up 2,213 more than the number of housing units in the same timeframe.
But even where new housing is available, much of it is outside the price range many average earners can afford.
Regarding houses in Washington County, Schoemann said that while there has been new construction of homes, it is almost impossible to find newly built homes for sale at less than $250,000. He said current pricing on new homes is presenting a strong obstacle to young people moving to Washington County, or returning there after time elsewhere.
“You get a nice job at one of our many good companies, but it’s a starting role, you can’t afford a quarter-million dollars,” Schoemann said. According to a report shared by Waukesha County Public Information Officer Nicole Armendariz and compiled by Waukesha County staff, “About 20 percent of owner-occupied households spent over 30 percent of their monthly income on housing costs. About 38 percent of renter-occupied households spent more than 30 percent of their monthly income on housing.”
The National Association of Realtors holds that the standard for housing to be affordable is that the cost of housing – either rent or the mortgage, including principal and interest – should not exceed 25 percent of the household’s income, thereby allowing the household enough income beyond that to afford all other costs of living.
The WRA report stated that in Wisconsin, 10.4 percent of households making from 50 to 80 percent of their area’s median income are “extremely cost burdened,” meaning they pay more than 50 percent of their income to housing. For those making 30 to 50 percent of the median income, 28.8 percent are extremely cost burdened.
Census data stated Waukesha County’s median household income for 2018 was $84,331, placing 30 percent at about $25,300, 50 percent at 42,165 and 80 percent at $67,465. In Washington County, the median household income was $74,062 in 2018. The 30 to 80 percent range for that median income would be about $22,219 to $59,250.
In West Bend, City Administrator Jay Shambeau said there has been some development targeting workforce housing. The Barton School Apartments, developed last year by converting the former Barton Elementary School, have income requirements for tenants to qualify for below-market rent. Shambeau said the apartments filled quickly.
“I believe there’s a demand,” Shambeau said. “From an apartment standpoint there’s been workforce housing, but not so much with single-family homes.”
Shambeau said West Bend is not currently in an active planning process related to the housing market, but the city has budgeted for planning efforts and to update its comprehensive plan in 2021.
“From 2010-2017, construction costs have increased by 14.7 percent in Madison, 14.9 percent in Milwaukee, and 16.2 percent in Green Bay. When construction costs go up, new housing becomes more expensive, but so too does existing housing due to increases in repair, remodeling and replacement costs,” according to the WRA report.
“Rising construction costs mean that all forms of housing are becoming more expensive and less available. This creates barriers to homeownership and to rental affordability,” the report found.