Fiscal Facts: Home prices increasingly outpace incomes

Home prices in Wisconsin, have grown much faster than incomes in recent years, creating especially acute challenges for prospective first-time homebuyers.

The median sales price of Wisconsin homes, increased 53.3 percent in five years, from $172,900, in 2017, to $265,000, in 2022. During those years, the state’s median household income increased by 19.7 percent.

These changes pushed the state’s home price-to-income ratio to its highest point in the available data, which goes back to 2007.

In 2022, median home sales prices in six counties, were at least 4.5 times their median household incomes. Notably, some of these rural counties include high shares of homes used for recreational purposes, which should be considered while evaluating their ratios.

In several counties with high price-to-income ratios, expensive housing markets can be seen as the primary driver. That is because their median household incomes in 2022, exceeded the statewide median of $70,996.

Looking at Wisconsin’s rental housing market, a different picture emerges. Median monthly gross rent (rent plus average cost of utilities) rose from $819 in 2017, to $992 in 2022, up 21.1 percent. That was actually slightly less than the 22 percent gain in those years, in median income for renter households.

However, the share of Wisconsin’s renters spending at least 30 percent of income on housing (the maximum percentage recommended) rose slightly, from 43.6 percent in 2017, to 45.4 percent in 2022. Also, some newer data suggests prices recently have increased faster in Wisconsin, than nationally.

Many factors are influencing housing affordability trends, a few of which are within the scope of state and local policymakers. These include municipal zoning, which can affect the amount and type of housing that’s built. Other factors include state laws and funding for affordable housing.

While all homebuyers are affected by rising housing costs, it’s particularly concerning for younger aspiring homebuyers, who may be denied some, or all, of the longterm benefits of homeownership – including the chance to build equity.

Ultimately, it will take multiple strategies and many years, to improve housing affordability in Wisconsin. The best approaches may vary throughout the state, depending on whether high housing costs or low incomes are key factors in a given area.

This information is a service of the Wisconsin Policy Forum, the state’s leading resource for nonpartisan state and local government research, and civic education.