Why Is Your Rent Rising?
Jeramey Jannene talks about Milwaukee's apartment boom on WTMJ.
Apartments under construction.
As anyone shopping for an apartment in Milwaukee can attest to, it’s hard to find an affordable place to live. Why is that?
WTMJ radio interviewed Jeramey Jannene this morning about his coverage of Milwaukee’s real estate market, including his recent article “Apartment Vacancies Hit 10-Year Low.” The article explored recent data from the U. S. Census Bureau that shows metro Milwaukee ranks as high as seventh in the nation in apartment occupancy rates. The metro area averaged a vacancy rate of just 4.55 percent for all of 2015, exactly matching its performance from 2014; both figures are the lowest at least 10 years.
The demand for apartments is driving new development in Milwaukee, Jannene noted: “We’re seeing a record number of proposals for apartment buildings in Milwaukee. Everywhere you look new developments are coming on line and they’re getting leased.”
The apartment boom goes beyond just Millenials and empty nesters filling new downtown apartments. The Census Bureau report examines the metropolitan statistical area, made up of Milwaukee, Waukesha, Washington and Ozaukee counties. The region, made up over 1.5 million residents, features one of the lowest rates of owner-occupied homes in the nation, putting it in line with New York City, Las Vegas and a host of other cities not commonly referenced as Milwaukee’s peers.
“You can speculate a number of reasons,” Jannene says. “Be it the poverty issue that is forcing people to not be able to own homes, be it the trend of millennials, be it empty nesters who are just selling their homes and moving into smaller units anywhere in the region. I think there are a number of factors, and you can’t just pin it on one thing.”
Listen to Wisconsin’s Morning News hosts Gene Mueller and Jane Matenaer interview Jeramey in the clip below.
I mentioned this in Jeremy’s pervious post, but want to bring it up again: Milwaukee’s very high property tax rate and low growth rate tend to make home ownership a worse bet financially than renting. I suspect that fact plays a signifcant role in this relationship.
Also curious if there’s any data regarding unmet demand and the number of apartments coming online. That is, where is the bottom of the vacancy rate, is Milwaukee on the verge of overbuilding like, say, Houston [1]?
[1]: http://www.houstonchronicle.com/business/real-estate/article/Growing-consensus-Local-apartment-market-6793840.php
I believe markets build to a point of saturation and it’s true with apartment construction. Biff, I don’t believe Milwaukee is alone in apartment construction so the property tax argument is flimsy. Although I think they are too high. I believe Milwaukee needs to have more ability to generate revenue but that would require action by the state. I digress. I’m more optimistic because I truly believe Milwauke is a very unique and livable city. We have energy, density and all the big city amenities without the costs.
Do we want long term residents living in Milwaukee? Or are we content with revolving door of young people in their 20’s leaving to go to the burbs once they make it in their careers and want to settle down some with creating a family? What does this have to do with apartments? A stable 30’s and older population will bring demands for improved quality of life issues in our downtown. Patronize for example,middle and upper end restaurants, demand better supporting infrastructure. They will also require schools that deliver higher learning outcomes for their children much better than the current system.
The city should require developers to include 3 bedroom units in both condo’s and apartment buildings that are affordable for young families. All we get are studios. one or two bedroom units. The few 3’s that are out there are 75k and above! Out of reach and non competitive with the burbs.
Ron
Ron, that is really up to the markets to decide what is best. Luckily, a few developers have tried a couple small projects with exactly that in mind and have seen great success. I think you’ll see more and larger projects that include larger units for empty nesters in the future.
Home ownership isn’t for everyone. We rented for the first 2 years we had moved here and immediately bought a house. Renting made me fell very ripped off. It took some time to find the right fit for our home but well worth it. The Riverwest tax rate isn’t bad and we have no kids so it was perfect. We plan to be around here for a few more years so it only made sense. I also feel we will be able to sell successfully once we decide to leave. it’s a win, win in my book.
Riverwest is a great neighborhood. Its affordable, walkable, interesting and there is a lot to do. I bought a small house there and I’ve been really happy. I chose a small and inexpensive house because due to our antiquated state tax code, Milwaukee’s only real revenue source is the property tax. The high rates are slowly destroying the city’s housing stock. There are big chunks of the city where the land would be worth more without the house and updating the plumbing or electric would exceed the value of the house. Not a good situation.
Something has to be done to encourage reinvestment in the city’s housing stock. Even though we’ve seen homeowners take on the rehab of homes here and there (Brewers Hill, Bay View), its far and few. If you don’t end up divorced or in court with your builder, you can surely expect to be killed by massive property tax increases as a big THANK YOU for wanting to stay in the city and investing in it. So….. why don’t we start a program that says if you invest in a city home as a rental or owner occupied, your property taxes will be frozen at the original amount for ten years. After ten years the city can reassess the value and tax accordingly. This way people will be encouraged to reinvest in homes and neighborhoods.
Wow, Some insightful ideas and comments. A few cities around the world set the tax value on urban real estate as follows:. Owners both occupant owned and owner rentals taxes are reduced when exterior and or interior improvements are made. There’s a % how low the taxes can be decreased, but what a fabulous idea! Neighborhoods are improved and maintained. Wouldn’t it be terrific if politicians had some creative ideas and the drive to implement them?
@Ron
In regard to the schools, a majority of the problems MPS faces are from their student population. Disengaged parents, poverty, other socioeconomic issues, etc. Those are all things students from stable middle and upper middle class families experience at a far lower rate. If you replaced all of the kids in a failing MPS school, with kids from stable middle and upper middle income (or above) families, you’d see massive changes in outcomes immediately.
The problem is, certain people, especially wealthier people, won’t send their kids to MPS until MPS has better “outcomes”, but MPS is going to struggle to have better outcomes without kids from stable and more prosperous environments. If and when MPS is, in fact, able to improve outcomes it will likely be through efforts that don’t necessarily apply to students from less challenging backgrounds. Improvements also may not occur district-wide, as people will zero in on a handful of higher achieving schools and only send their kids there, or else outside of the district (which already happens).
Agreed Devin. Fabulous opportunity for the resources and enthusiasm for the “Black Lives Matter” advocates to focus their efforts on our precious children aiding the parents and children to develop their intellect, skills etc. There are some example nationally but far too few!
I financially support the “Parenting Network”. An extraordinary non-profit that helps parents develop excellent skills and is committed to improving life quality issues for children. It’s easy to tlak, but so much more rewarding to “Act, to Help”
My personal opinion, though I am in the minority, is that home ownership is a major hassle. I wouldn’t pin it so much on worrying about taxes as on the immense amounts of time and effort and energy that you have to put into property ownership.: raking leaves, replacing fixtures, calling plumbers, shoveling snow, replacing windows, repaving a driveway, cleaning gutters, and so on. Every bloody thing that goes wrong is your problem, and it’s unpredictable. Not to mention all the add-ons that people can’t seem to live without, like decks and landscaping and garages, etc. My perception of many home owners is that they are frequently preparing their house for some future living rather than just living and enjoying.
My time is worth money too, and I would rather rent and enjoy the freedom that comes with it. I watch people who own homes dump remarkable amounts of money and time and sweat and emotional energy into maintaining and updating their homes, and I think that when these things are accounted for, it’s not really the amazing investment people make it out to be. If you rent and live within your means, you can put away a lot of money and also have lots of free time and energy to live your life. Look to Europe to see countries with a higher quality of life where people do not feel the same need to own a house.
Again, I know I am in the minority here, but I have never seen the appeal of the burden of home ownership. I’ve always rented and been happy with it.