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Madison: Real Estate and Market Trends

Over the course of five years, the Wisconsin economy has undergone significant transformations. The New Year brought encouraging sings of momentum for the entire state. For all intents and purposes, Wisconsin is the beneficiary of strong economic and demographic fundamentals. One city, in particular, is responsible for the state’s strong showing: Madison. As the capital of Wisconsin, Madison has played a large role in making the state relevant again. In fact, you can argue that the recent success of Madison’s economy catapulted the entire state of Wisconsin into relevancy.

The Madison housing market, and particularly Madison real estate investing, has played a large role in the city’s economic success. With an appreciation rate of 5.4 percent, Madison real estate values are growing on par with the national average, but home prices have outpaced the rest of the country. The median home price in the City of Four Lakes is $230,400. The national average is more than $20,000 less ($208,067). Of particular importance, however, are the three consecutive years of price growth that have returned a considerable amount of equity to the Madison housing market.

Madison, WI map with pin in it

Prices in this region continue to grow relative to last year, and homeowners couldn’t be happier. Subsequently, Madison real estate investing shares the same sentiment. The following highlights how much equity has been gained relative to the year of the home’s purchase:

  • Homes purchased in the Madison housing market one year ago have appreciated, on average, by $15,232. The national average was $14,170 over the same period.
  • Homes purchased in the Madison housing market three years ago have appreciated, on average, by $31,573. The national average was $53,857 over the same period.
  • Homes purchased in the Madison housing market five years ago have appreciated, on average, by $44,351. The national average was $48,036 over the same period.
  • Homes purchased in the Madison housing market seven years ago have appreciated, on average, by $23,740. The national average was $13,870 over the same period.
  • Homes purchased in the Madison housing market nine years ago have appreciated, on average, by $34,309. The national average dropped $2,822 over the same period.

Considering where the entire state of Wisconsin was just five short years ago, it is impressive how far the economy has come. Wisconsin is officially the fourth best state to find a job. However, as if that wasn’t enough, Wisconsin also has the third brightest job outlook. Again, Wisconsin’s success can be attributed to its capital. Madison has an unemployment rate of 3.4 percent – well below the nation’s 5.6 percent. No more than a year ago, that rate was at 4 percent, representing a decrease of 0.6 percent. However, Madison’s job growth rate is what economists are really raving about. At 3.2 percent, Madison’s job growth rate is far superior to the national average. That said, the local economic outlook is more than encouraging – which is great news for the housing market and Madison real estate investing.

Madison skyline

The Madison housing market has just about every indicator working in its favor. Even in the face of historically high appreciation, affordability continues to support the progression of the local real estate market. In fact, the Madison housing market is more affordable than most others across the country. Whereas Madison homeowners have become accustom to spending about 9.8 percent of their income on monthly mortgage obligations, the average homeowner across the country allocates more than 15 percent of their income to the same thing.

It is that affordability that makes Madison real estate investing so attractive. That said, the distressed market is a great place to find discounted properties. According to RealtyTrac, the Madison housing market has more than 377 homes in some state of foreclosure – meaning they are either in default, have been repossessed by the bank, or are to be placed up for auction. While the number of Madison foreclosures is actually down 33 percent from the previous year, there are plenty of deals to go around.

Those interested in Madison real estate investing should be encouraged by the discounts the distressed market offers. Non-distressed homes are selling for an average of $199,800. Distressed properties, on the other hand, have an average sales price of $152,500. Depending on how you look at it, that is an average savings of 24 percent or $47,300 per property.

Madison real estate investing will benefit from foreclosures that are up for auction, as they make up the majority of today’s distressed market (56.8%). That number is down more than 22 percent from last year. Coming in at second place, pre-foreclosures make up 29.7 percent of Madison’s foreclosures. The remaining distressed properties are all bank-owned. Madison real estate investing should see a lot of activity coming from each of these areas.

The Madison housing market has really benefited from the expansion of the economy. According to Zillow’s Market Health Index, the city’s metro market is very healthy – receiving a 9.1 out of 10. The health of the Madison housing market has seen an incredibly low negative equity rate as well. Only 10.8 percent of the homes in the area are under water – well below the national average of 16.9 percent. Only 2.5 percent of Madison homeowners are delinquent on their mortgage obligations. For all intents and purposes, Madison, WI has taken the recovery and run with it. Real estate investing in the area should continue to benefit from the success of the local housing market, as it is one of the hottest in the country.

Madison Housing Market Summary:

  • Current Median Home Price: $230,400
  • 1-Year Appreciation Rate: 5.4%
  • Unemployment Rate: 3.4%
  • 1-Year Job Growth Rate: 3.2%
  • Population: 243,344
  • Median Household Income: $59,466

Madison County Map:

Map of Madison, WI neighborhoods

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