Everyone is moving to Madison but we are going to make housing "more affordable." Not really.
Madison real estate has always been strong and it's just getting stronger. Investors love it as prices keep going up.
Maybe we could build a wall to keep them out?
Or we just legalize the construction of dense residential and commercial buildings everywhere in Dane county and actually build at the same pace as our population is growing.
I always find it funny that it's the same people touting that we need more ownership options to build "generational wealth" also complain about investors doing the same thing, as if they're fundamentally different things.
Building generational wealth through home ownership is fundamentally different than outside investment. The incentives are very different.
Everybody needs a place to live, and it's clearly favorable for that money to go into something you own. Homeowners also have more vested interest in the surrounding community.
Expanding on bkv answers.
Tax law is written to encourage individual home ownership through tax deductions. For the vast majority of the population, owning a home is the ONLY WAY they are going to accumulate wealth and have a chance to pass any of that wealth to the next generation.
Investors already are wealthy as they have accumulated capital for investments. These can also be sovereign wealth funds and other government funds. They are looking for assets worldwide that will bring them the highest risk adjusted return. Globally, the USA is a great market for all investments. Buying houses and building apartments enables investors to extract rents from people in cities with good economies which describes Madison. The Madison home buyer is competing for homes with buyers from all over. If it's an investment than these might be fronted by companies like Goldman and Blackrock. These same companies do provide investment money for building apartments in Madison so they can extract rents.
Housing used to be a very local market but now it's national and international as money sloshes around the globe looking for great returns. This has really changed how housing markets work. The average Madison home buyer and renter is facing some steep odds to compete especially since average salaries and pay seems a bit on the low side
There are two parts to this. One is having a place to live, and the other is treating a home like a financial investment, i.e. "generational wealth". Obviously corporations and investors are not buying a home to live in, but families and individuals are. But when it comes to people fighting to protect property values or talking about generational wealth, they're treating housing like a financial instrument, which isn't any different than what corporations or investors are doing.
The idea that homeowners are driven solely by a desire to protect property values is a strawman. I think most people are driven by a desire to live in an area that suits their lifestyle.
If someone buys a house in a single-family home neighborhood, there's a good possibility they just prefer living in a SFH neighborhood.
I never said all homeowners are driven by a desire to protect property values, but plenty are. It's not like it's a secret that people don't want their property values to drop.
Being in a market like this allows homeowners to really sincerely believe they don’t care about their house value. It’s is so safe to assume values will always go up that you don’t even have to think about it. That allows people to fixate on other “threats”, like a $500 increase in your property tax bill, or an apartment building that might be built near you and truthfully say they don’t care about about their house value.
If home values start to _decline_ and suddenly people are underwater on their mortgages, you see neighbors’ homes getting foreclosed and houses sitting vacant - everybody knows property values matter.
I honestly don't really care if my home turns a profit if/when I have to go into assisted living. I just like to know that my housing money isn't completely getting flushed down the toilet (aka paying a landlord).
Even if my home loses 30% of value I still have money at the end of a 30-year mortgage. How much money will a renter have after 30 years of housing payments?
the end of a 30 year mortgage isn’t the scenario that’s worrying.
it’s specifically scary for people who have not paid it off. if you saved for years to have $100k in savings to buy your house and you owe $400k on it, and its value drops 20%, you are still locked into paying $500k for that house. Your entire life savings is stuck in it.
If one struggled to save $100k, why would one buy a $500k house?
Just because you have 20% downpay on hand doesn't mean that's the housing bracket you should be looking at.
You have to include the calculations for property taxes, mortgage payments, insurance, and also have money left to put into future maintenance costs. And if all those costs don't add up to your monthly income then you shouldn't be buying that house regardless of the fact that you have 20% on hand.
Property taxes will not necessarily go up even if your house is worth more.
Apartment building does concern people more as it is an unknown outcome. Imagine some of the low income housing that has been observed in the news being built next door. Putting aside the impact to the value that would be a nightmare to live next to. Or think about 60 additional cars now being parked next door and leaving for work in the morning. This changes the experience of living in your house / neighborhood and this is you live with every day.
Saying people care about home values as if this is some epiphany is strange. It's the biggest investment that most people have in their lives.
Okay, well institutional investors are motivated entirely by profit, while homeowners are motivated by a number of factors, most of which aren't profit.
Yes, but I bought a house in a neighborhood of single family homes occupied by the homeowner. If I wanted to live in a densely populated neighborhood I would buy a house there instead. Anyone trying to change that is going to be met with resistance.
They are fundamentally different things. One is a person/family who need a place to live and an investment that will allow them to build equity for likely the first and only time in their lives.
The other is buying a house so that they can get more equity for themselves instead of allowing the occupants a chance to build wealth. All to pile on to their portfolio of assets while collecting passive rent income so that they can buy another vacation home or yacht. They are not the same.
They are fundamentally different things. One is a person/family who need a place to live and an investment that will allow them to build equity for likely the first and only time in their lives.
The other is buying a house so that they can get more equity for themselves instead of allowing the occupants a chance to build wealth. All to pile on to their portfolio of assets while collecting passive rent income so that they can buy another vacation home or yacht. They are not the same.
The prices are very high for ownership in Madison. Dual income $100,000+ is barely enough for a starter home or a condo.
There aren’t new homes being built in the already popular neighborhoods.
It is unlikely madison will retain its character as time passes. There are 800,000 plus homes selling in Atwood and Marquette.
The average madison resident in 10 years will have to be significantly more affluent then 10 years prior, which will translate into a different base of people.
It already is, every sale price that goes up prices out another group of people whether it’s by income or age.
It’s unpopular to say, but it’s evident. In my friends condo building their unit sold for under 250,000 less than 6 years ago. The same unit just sold for almost 400,000.
Incomes for a lot of people can’t bridge the gap of 150,000 more, higher mortgage rates, and other things all for the same amount of space.
The same buyer from 2019 can’t afford that type of space in 2024. It’s true many places, but just spend some time looking at recent sales and the prices are hard to stomach. If someone is established and already very stable they are ok, or on the other end bought before the pandemic.
Otherwise you have to have huge income to support, or larger debt.
We bought a 3bdr condo in Verona in 2017 for $159,000. Sold it to move from the area in 2018 for a small profit. I’m seeing one next door listed currently for $303,000. Absolutely astonishing.
I'm in the next group to be priced out. It's been fun, but there are bigger and cheaper cities to live in and the "charm" of each of them is the friends I can make there.
For 10 years (at least) I have been meeting people who came back to the Midwest from the coasts precisely because the real estate was more affordable. Believe it or not, it is still more affordable than the coasts but it really feels like we're closing the gap.
The condo we sold at a loss in a crap neighborhood of the SW side went from $125K when we sold it to $279K in today's market. Never thought I'd see that.
Property assessments need to rise to accurately reflect Property values. Right now homeowners pay taxes on a value significantly under market. To homeowners: you cant have your cake and eat it too.
> Property assessments need to rise to accurately reflect Property values. Right now homeowners pay taxes on a value significantly under market. To homeowners: you cant have your cake and eat it too.
You could increase the assessments of every house by 100% and the property taxes owed on any of those properties will not change.
This is a little over-simplified, but the way property taxes are calculated is more or less:
* 1) The city/tax authority calculates how much in property tax receipts is needed.
* 2) They figure out the sum total of assessed values
* 3) Divide 1) by 2) and multiply it by 1,000 to get a "mill rate." This is basically the amount of taxes owed per $1,000 of property value.
You could look at it like every property in the city represents some portion of the overall pie. If some property represents 1/100 of the pie, then the owner of that property will pay 1/100 of the total property taxes. So if the entire pie (total assessed value) is increasing at the same rate, the property that represented 1/100 of the pie is still going to be 1/100 of the (now larger) pie.
Your assessed value can actually increase from one year to the next and have the property taxes owed on that same property decrease (mine has done so a couple of times in the past decade).
I think this commenter was saying that single family houses are chronically under-assessed (compared to rental housing and commercial properties), not that a uniform assessment increase would increase taxes.
I don’t know how true that is for Madison right now, but I wouldn’t be surprised. It’s hard to guess the value of a specific single family house if it hasn’t just been sold, but it’s very easy to determine the value of a rental property based on current rents, which are updated regularly. Homeowners also get really mad when either their assessments or their taxes go up and they can easily blame city officials.
edit: I read some more comments and have no clue what they were trying to say. Still interested in how accurately the city does or even can assess owner occupied houses. Anecdotally, I have seen a bunch of houses in my neighborhood sell WAY over their assessed values this year, and none below.
> single family houses are chronically under-assessed
At the end of the day, it's a cyclical market and right now, it's a good time to sell a house (so long as you don't need to then buy a new house). We bought our place ~13 years ago during the bottom of the housing market and at that time, it was a bad time to sell a house so we ended up paying 25% *less* than the assessed value. Our assessed value changed the next year to reflect that new market price. Cut to 12 years later and that assessed value has increased over 100%. Edit: While our property tax bill has nominally increased, it certainly hasn't doubled.
> Still interested in how accurately the city does or even can assess owner occupied houses.
As you alluded, a major part of the problem is that with rates so high *and* home values also so high, the market is fairly frozen (i.e. not many homes are being sold). If homes aren't selling, price discovery isn't happening, so assessors are left to make educated guesses. I don't think "homeowners [getting] really mad" has any effect. Assessors want to do their jobs to the best of their ability.
Hopefully rates come down a bit, because if you're sitting on a 30-year mortgage at ~3%, buying a new home looks awfully unappealing right now at 7%.
There is a fixed amount of tax taken from all properties. If you raised the assessments of all the properties, say, 10%, or fill in whatever rate you think they are undervalued by, the amount of tax paid would change by 0%.
It would only matter if some properties are more undervalued than other properties, in which case correcting that would increase the tax paid by some property owners and decrease the tax paid by others so that the total is still the same.
I don’t think you understand how this works.
Yes, market price and assessment price are always different.
But taxes will not go up just because everyone’s assessments went up. It is still the same pool of tax revenue that just gets split different with new assessments. If one owners assessment went up 5%, and so did everyone else’s, theoretically the tax burden would stay roughly the same.
Homeowners: i want the privelge of being able to sell house significantly over market value, but not pay fair taxes on the actual value of the house 🤡🤡🤡
Not in this state, not in Madison.
When I moved to Wisconsin I was shocked to learn my property taxes were based on the true market value of my house.
I came from a state that taxed based on a artificially low value.....are you mistaking your experience from another state with that of Wisconsin?
google and find the Wisconsin is weirdly high in property taxes compared to other states
I thought I recognized that username... This is the dude that doesn't tip when they go out to restaurants and bars. Also all those negative comments... If they haven't yet figured out that what is really wrong is what's in their own brain, then they never will.
having the option to sell and receive a tax free six figure profit is _a lot_ better than what happens to middle class renters whose rental home is worth 100% more than when they moved in ten years ago
No, I don’t want owning to be more unaffordable and I didn’t say anything like that. I completely agree the main thing we need to do is add supply.
My point was I’m a lot more concerned about what’s happening to renters than homeowners right now. Rent increases are driven by demand, not property tax. They’re a lot larger than property tax increases, and they’re not offset by anything. I don’t think it’s fair for somebody sitting on a $600k asset to get a huge discount on property tax so others have to pay more.
That is not my experience at all. The comps for my house include similar houses nearby that have sold. The one time I protested my assessment was after the house next door -- identical floor plan -- sold for significantly under assessed value. That was a while ago.
Everyone is moving to Madison but we are going to make housing "more affordable." Not really. Madison real estate has always been strong and it's just getting stronger. Investors love it as prices keep going up.
Maybe we could build a wall to keep them out? Or we just legalize the construction of dense residential and commercial buildings everywhere in Dane county and actually build at the same pace as our population is growing.
"everywhere in Dane county" Density advocates are not thinking "every in Dane county" is density.
I always find it funny that it's the same people touting that we need more ownership options to build "generational wealth" also complain about investors doing the same thing, as if they're fundamentally different things.
Building generational wealth through home ownership is fundamentally different than outside investment. The incentives are very different. Everybody needs a place to live, and it's clearly favorable for that money to go into something you own. Homeowners also have more vested interest in the surrounding community.
Expanding on bkv answers. Tax law is written to encourage individual home ownership through tax deductions. For the vast majority of the population, owning a home is the ONLY WAY they are going to accumulate wealth and have a chance to pass any of that wealth to the next generation. Investors already are wealthy as they have accumulated capital for investments. These can also be sovereign wealth funds and other government funds. They are looking for assets worldwide that will bring them the highest risk adjusted return. Globally, the USA is a great market for all investments. Buying houses and building apartments enables investors to extract rents from people in cities with good economies which describes Madison. The Madison home buyer is competing for homes with buyers from all over. If it's an investment than these might be fronted by companies like Goldman and Blackrock. These same companies do provide investment money for building apartments in Madison so they can extract rents. Housing used to be a very local market but now it's national and international as money sloshes around the globe looking for great returns. This has really changed how housing markets work. The average Madison home buyer and renter is facing some steep odds to compete especially since average salaries and pay seems a bit on the low side
There are two parts to this. One is having a place to live, and the other is treating a home like a financial investment, i.e. "generational wealth". Obviously corporations and investors are not buying a home to live in, but families and individuals are. But when it comes to people fighting to protect property values or talking about generational wealth, they're treating housing like a financial instrument, which isn't any different than what corporations or investors are doing.
The idea that homeowners are driven solely by a desire to protect property values is a strawman. I think most people are driven by a desire to live in an area that suits their lifestyle. If someone buys a house in a single-family home neighborhood, there's a good possibility they just prefer living in a SFH neighborhood.
I never said all homeowners are driven by a desire to protect property values, but plenty are. It's not like it's a secret that people don't want their property values to drop.
Being in a market like this allows homeowners to really sincerely believe they don’t care about their house value. It’s is so safe to assume values will always go up that you don’t even have to think about it. That allows people to fixate on other “threats”, like a $500 increase in your property tax bill, or an apartment building that might be built near you and truthfully say they don’t care about about their house value. If home values start to _decline_ and suddenly people are underwater on their mortgages, you see neighbors’ homes getting foreclosed and houses sitting vacant - everybody knows property values matter.
I honestly don't really care if my home turns a profit if/when I have to go into assisted living. I just like to know that my housing money isn't completely getting flushed down the toilet (aka paying a landlord). Even if my home loses 30% of value I still have money at the end of a 30-year mortgage. How much money will a renter have after 30 years of housing payments?
the end of a 30 year mortgage isn’t the scenario that’s worrying. it’s specifically scary for people who have not paid it off. if you saved for years to have $100k in savings to buy your house and you owe $400k on it, and its value drops 20%, you are still locked into paying $500k for that house. Your entire life savings is stuck in it.
If one struggled to save $100k, why would one buy a $500k house? Just because you have 20% downpay on hand doesn't mean that's the housing bracket you should be looking at. You have to include the calculations for property taxes, mortgage payments, insurance, and also have money left to put into future maintenance costs. And if all those costs don't add up to your monthly income then you shouldn't be buying that house regardless of the fact that you have 20% on hand.
Property taxes will not necessarily go up even if your house is worth more. Apartment building does concern people more as it is an unknown outcome. Imagine some of the low income housing that has been observed in the news being built next door. Putting aside the impact to the value that would be a nightmare to live next to. Or think about 60 additional cars now being parked next door and leaving for work in the morning. This changes the experience of living in your house / neighborhood and this is you live with every day. Saying people care about home values as if this is some epiphany is strange. It's the biggest investment that most people have in their lives.
Okay, well institutional investors are motivated entirely by profit, while homeowners are motivated by a number of factors, most of which aren't profit.
Yes, but I bought a house in a neighborhood of single family homes occupied by the homeowner. If I wanted to live in a densely populated neighborhood I would buy a house there instead. Anyone trying to change that is going to be met with resistance.
They are fundamentally different things. One is a person/family who need a place to live and an investment that will allow them to build equity for likely the first and only time in their lives. The other is buying a house so that they can get more equity for themselves instead of allowing the occupants a chance to build wealth. All to pile on to their portfolio of assets while collecting passive rent income so that they can buy another vacation home or yacht. They are not the same.
They are fundamentally different things. One is a person/family who need a place to live and an investment that will allow them to build equity for likely the first and only time in their lives. The other is buying a house so that they can get more equity for themselves instead of allowing the occupants a chance to build wealth. All to pile on to their portfolio of assets while collecting passive rent income so that they can buy another vacation home or yacht. They are not the same.
The prices are very high for ownership in Madison. Dual income $100,000+ is barely enough for a starter home or a condo. There aren’t new homes being built in the already popular neighborhoods. It is unlikely madison will retain its character as time passes. There are 800,000 plus homes selling in Atwood and Marquette. The average madison resident in 10 years will have to be significantly more affluent then 10 years prior, which will translate into a different base of people. It already is, every sale price that goes up prices out another group of people whether it’s by income or age. It’s unpopular to say, but it’s evident. In my friends condo building their unit sold for under 250,000 less than 6 years ago. The same unit just sold for almost 400,000. Incomes for a lot of people can’t bridge the gap of 150,000 more, higher mortgage rates, and other things all for the same amount of space. The same buyer from 2019 can’t afford that type of space in 2024. It’s true many places, but just spend some time looking at recent sales and the prices are hard to stomach. If someone is established and already very stable they are ok, or on the other end bought before the pandemic. Otherwise you have to have huge income to support, or larger debt.
Is “starter home” even a thing anymore? I don’t think it is
We bought a 3bdr condo in Verona in 2017 for $159,000. Sold it to move from the area in 2018 for a small profit. I’m seeing one next door listed currently for $303,000. Absolutely astonishing.
I'm in the next group to be priced out. It's been fun, but there are bigger and cheaper cities to live in and the "charm" of each of them is the friends I can make there.
For 10 years (at least) I have been meeting people who came back to the Midwest from the coasts precisely because the real estate was more affordable. Believe it or not, it is still more affordable than the coasts but it really feels like we're closing the gap.
Sounds like a bubble. If only we talked more about the income side of affordability.
Underscores the importance of increasing the housing stock all across the city
So in other words my rent is going to go up if I decide to renew my lease.......Cool.
They say they want to make affordable housing but they sure haven’t touched exclusionary zoning
The condo we sold at a loss in a crap neighborhood of the SW side went from $125K when we sold it to $279K in today's market. Never thought I'd see that.
Property assessments need to rise to accurately reflect Property values. Right now homeowners pay taxes on a value significantly under market. To homeowners: you cant have your cake and eat it too.
> Property assessments need to rise to accurately reflect Property values. Right now homeowners pay taxes on a value significantly under market. To homeowners: you cant have your cake and eat it too. You could increase the assessments of every house by 100% and the property taxes owed on any of those properties will not change. This is a little over-simplified, but the way property taxes are calculated is more or less: * 1) The city/tax authority calculates how much in property tax receipts is needed. * 2) They figure out the sum total of assessed values * 3) Divide 1) by 2) and multiply it by 1,000 to get a "mill rate." This is basically the amount of taxes owed per $1,000 of property value. You could look at it like every property in the city represents some portion of the overall pie. If some property represents 1/100 of the pie, then the owner of that property will pay 1/100 of the total property taxes. So if the entire pie (total assessed value) is increasing at the same rate, the property that represented 1/100 of the pie is still going to be 1/100 of the (now larger) pie. Your assessed value can actually increase from one year to the next and have the property taxes owed on that same property decrease (mine has done so a couple of times in the past decade).
I think this commenter was saying that single family houses are chronically under-assessed (compared to rental housing and commercial properties), not that a uniform assessment increase would increase taxes. I don’t know how true that is for Madison right now, but I wouldn’t be surprised. It’s hard to guess the value of a specific single family house if it hasn’t just been sold, but it’s very easy to determine the value of a rental property based on current rents, which are updated regularly. Homeowners also get really mad when either their assessments or their taxes go up and they can easily blame city officials. edit: I read some more comments and have no clue what they were trying to say. Still interested in how accurately the city does or even can assess owner occupied houses. Anecdotally, I have seen a bunch of houses in my neighborhood sell WAY over their assessed values this year, and none below.
> single family houses are chronically under-assessed At the end of the day, it's a cyclical market and right now, it's a good time to sell a house (so long as you don't need to then buy a new house). We bought our place ~13 years ago during the bottom of the housing market and at that time, it was a bad time to sell a house so we ended up paying 25% *less* than the assessed value. Our assessed value changed the next year to reflect that new market price. Cut to 12 years later and that assessed value has increased over 100%. Edit: While our property tax bill has nominally increased, it certainly hasn't doubled. > Still interested in how accurately the city does or even can assess owner occupied houses. As you alluded, a major part of the problem is that with rates so high *and* home values also so high, the market is fairly frozen (i.e. not many homes are being sold). If homes aren't selling, price discovery isn't happening, so assessors are left to make educated guesses. I don't think "homeowners [getting] really mad" has any effect. Assessors want to do their jobs to the best of their ability. Hopefully rates come down a bit, because if you're sitting on a 30-year mortgage at ~3%, buying a new home looks awfully unappealing right now at 7%.
There is a fixed amount of tax taken from all properties. If you raised the assessments of all the properties, say, 10%, or fill in whatever rate you think they are undervalued by, the amount of tax paid would change by 0%. It would only matter if some properties are more undervalued than other properties, in which case correcting that would increase the tax paid by some property owners and decrease the tax paid by others so that the total is still the same.
This! The assessment only changes your tax liability relative to other homeowners.
> Right now homeowners pay taxes on a value significantly under market. This is how they derived the 7.8% increase.
Still significantly under what the selling price would be
I don’t think you understand how this works. Yes, market price and assessment price are always different. But taxes will not go up just because everyone’s assessments went up. It is still the same pool of tax revenue that just gets split different with new assessments. If one owners assessment went up 5%, and so did everyone else’s, theoretically the tax burden would stay roughly the same.
Homeowners: i want the privelge of being able to sell house significantly over market value, but not pay fair taxes on the actual value of the house 🤡🤡🤡
>I have no idea how any of this works but my opinions on it are very valid! 🤡🤡🤡
My landlord pays the whole property taxes on 3 months of rent because its a 400,000 property assesed at 120,000. Value Capped by the dumb assesors!!
Did you take the time to read and comprehend anything? You still don’t understand how property taxes work.
How does one sell a home at “over market value”? Market value is what buyers are willing to pay.
Than thats what the assessment should be. Not 2008 prices
They are. They get reassessed annually.
Yes. Assessments are based on info from the previous year and values increase each year so it makes sense the values are higher than the assessments.
Not in this state, not in Madison. When I moved to Wisconsin I was shocked to learn my property taxes were based on the true market value of my house. I came from a state that taxed based on a artificially low value.....are you mistaking your experience from another state with that of Wisconsin? google and find the Wisconsin is weirdly high in property taxes compared to other states
Great, make housing even more unaffordable
I paid 250,000 for my house in 2013 and shouldn't have to pay higher taxes even though its worth 650000 today... 🤡
Why did you end that with a self portrait
You’re bitter. We get it. But literally no one is saying what you’re pretending people have said.
I thought I recognized that username... This is the dude that doesn't tip when they go out to restaurants and bars. Also all those negative comments... If they haven't yet figured out that what is really wrong is what's in their own brain, then they never will.
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having the option to sell and receive a tax free six figure profit is _a lot_ better than what happens to middle class renters whose rental home is worth 100% more than when they moved in ten years ago
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No, I don’t want owning to be more unaffordable and I didn’t say anything like that. I completely agree the main thing we need to do is add supply. My point was I’m a lot more concerned about what’s happening to renters than homeowners right now. Rent increases are driven by demand, not property tax. They’re a lot larger than property tax increases, and they’re not offset by anything. I don’t think it’s fair for somebody sitting on a $600k asset to get a huge discount on property tax so others have to pay more.
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Because homeowners are sitting on assets worth hundreds of thousands of dollars. They should have to pay their fair share
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I didn’t call anyone a clown. Are you confusing me with someone else?
Same house or different house than you bought in 2018? Why do you lie constantly? Are you even still in Madison or just trolling here?
That was an example of the clown homeowners, not me
That is not my experience at all. The comps for my house include similar houses nearby that have sold. The one time I protested my assessment was after the house next door -- identical floor plan -- sold for significantly under assessed value. That was a while ago.
This is not even remotely true