State Home Prices Rose 49% in Five Years

Sold sign. Photo by Dave Reid.

A new study find that home prices rose by a whopping 49.4% in Wisconsin over the past five years.

Yet that was surpassed by 28 states, which saw even larger hike, led by Idaho with a 91.9% increase in five years, followed by Montana, at 79.4%.

The states with lowest increase in house prices over this period were North Dakota (up 22.7%) and Louisiana (up 23.6%).

Wisconsin’s hike in home prices was slightly below that of the median states, Nebraska (50.8% increase) and Michigan (53.7%) over this period.

The research was done by Boulder Home Source, which analyzed data from Zillow for the five-year period from February 2018 to February 2023 across all 50 states to determine which states had the smallest and biggest rises in house prices.

Another analysis, by the St. Louis Federal Reserve Bank and using Census Bureau research, actually shows a smaller increase in home prices nationally, though it does not do a state-by-state measurement, and does include the first to months of 2023. The Fed bank found that average home price nationally increased from $399,700 in the fourth quarter of 2017 to $535.800 in the fourth quarter of 2022. That’s a 34% increase over that period.

But that period actually saw a decline in values from 2017 to 2020 to an average home price of $374,500. In the two years since then home prices have skyrocketed by 43%. All signs suggest that increase is continuing so far in 2023 though some are predicting a drop in prices as the year goes on.

The increase, real estate experts have suggested, is due to high demand for homes and a limited supply for sale. “This is a very, very, very strong seller’s market right now,” Marquette University Economics Professor David Clark said last year.

While some of this is cyclical, fueled by a post-pandemic boom, there is also a long-term problem of not enough housing in the U.S. and Wisconsin. Freddie Mac, which was chartered by Congress in 1970 to support the U.S. housing finance system, has estimated that the nation is short 3.8 million housing units to keep up with household formation.

A New York Times story last year found that the housing shortage, which was once a East Coast and West Coast problem, has spread to the rest of the country. Among 15 metro areas in the nation with big shortages that once had a surplus of housing were Appleton, Racine, Green Bay and Sheboygan. Milwaukee County was also ranked as an area with a shortage of housing, though not as big proportionately as the other four cities in Wisconsin.

A January 2023 report from Forward Analytics, the research arm of the Wisconsin Counties Association, found that Wisconsin needs to build at least 140,000 housing units by 2030 just to keep up with current demand. If the state hopes to increase its working-age population by the end of the decade, the report found, the number of housing units needed jumps to 227,000.

While market forces (rising land prices and a shortage of construction workers) are helping drive this trend, the Times story noted, political factors are also helping to create a shortage: “Local residents often oppose new housing. Local governments require development fees, studies and public meetings that drag out construction and drive up its cost. Through zoning rules, governments also force developers to build on larger lots than some buyers might want, and create more parking than buyers might use. And these rules frequently make it impossible to build townhouses, duplexes and apartment buildings.”