Problems with Housing Licenses in Wisconsin and Madison

The new construction trend in the American state of Wisconsin indicates that it is now much more common to see the construction of buildings or housing complexes than single-family properties; despite this, building permits continue to be stalled.

Official data indicate that due to the boom during the pandemic in the market for building or large apartment complexes, the authorities had significantly increased the issuance of licenses for both the county of Wisconsin and the city of Madison.

Today, this is no longer the case; the issuance of licenses is now very infrequent, and it is a problem that is causing concern among the authorities, as this could lead to a delicate case of housing affordability.

Wisconsin figures indicate that according to market needs and its growing population, the state would need to have the capacity to offer approximately 228,000 homes in the future; but apparently, and according to the current inclination of the real estate market, this will not be the case.

Among the causes of this significant slowdown in construction are the high mortgage loan rates that have been increasing and the high costs of construction materials, which make it increasingly difficult for investors, developers, and people in the real estate market to work.

Although last year, building permits remained relatively stable, the report indicates that the state of Wisconsin was in a poor position compared to the national study conducted.

As is known, residential constructions of buildings and apartment complexes generally belong to a single owner or a single real estate developer and are always intended to operate under a rental contract.

Now, if the increase in licenses was for this type of property, it can be understood that affordability for the rental market is resolved. The problem would then be for people looking to buy a single-family property, where data indicate that this market will not have good affordability.

Among the advantages that this phenomenon of authorities issuing more building licenses for buildings could present is that there will be more housing offers and perhaps some relief in rental prices. An advantage that single-family homes will not have, as without much supply, prices will likely be very high.

In Madison, official data indicate that in previous years it was the city in Wisconsin that granted the most building permits, therefore it was the city that had much more movement within the real estate market and offered the most affordable housing.

However, for this year the situation is no longer the same. Now building permits for single-family properties have seen a considerable reduction and have caused the prices of this type of housing to present a constant increase.

There is another factor, in addition to those mentioned above, that causes building permits to decrease and therefore affordability, and that is the lack of land to build new properties for both buildings and single-family homes.

The official report summarizes that despite the factors affecting housing affordability in Wisconsin, and especially in the city of Madison, they do not consider that they will lead to a new recession and indicate that there may still be a significant improvement in the real estate market that leads to economic stability in the state.

Available Foreclosures:

Madison: 15 homes available.

By Elias DaSilva | October 15, 2024.