Try 1 month for 99¢

Cap Times news editor Jason Joyce (far right) moderates a panel about Madison's housing market at the High Noon Saloon Wednesday. From left: city housing specialist Matt Wachter, Habitat for Humanity Dane County CEO Valerie Johnson, sociologist Hanif Nu'Man and realtor Liz Lauer.

According to the 2016 City of Madison Housing Report on market rate ownership, 29 percent of Madison millennials own homes, even though many more can financially afford to buy one. So what might inspire them to leave their apartments and buy into the market?

That was one question addressed by four housing experts at a Cap Times Talk held at the High Noon Saloon on Madison’s east side Wednesday night.

City housing initiatives specialist Matt Wachter said he believes that number is on the rise, as might be indicated in the hot seller’s market currently at play in Madison. But others acknowledged that for people looking for to buy, fallout from the subprime mortgage crisis of ten years ago may still be a deterrent. Hanif Nu’Man, chief sociologist at ReSCI Consulting, said ability to buy comes down to the “three Cs” of lending: Capacity, Collateral and Credit.

Valerie Johnson, CEO of Habitat for Humanity Dane County, said families that apply for housing through her organization have to follow the same rules as those who apply for mortgages through other means and debt is a big factor.

“Habitat families don’t get free homes, they actually pay full appraised price for their homes. We make it affordable through a zero percent mortgage,” she said. “We do all those credit checks, we do it very differently but it still comes down to the same thing in the end: can they repay that loan? Will they be a good partner with us? We look at the capacity (of applicants) to repay. Most reasons people get turned down for homes are because they have too much debt-to-income.”

Johnson said that when times are tough, Habitat attracts fewer applicants. Because income rates are up right now, Johnson said Habitat’s waiting list might be growing. The organization builds 15 homes a year in Dane County, Johnson said.

In terms of the wider market, demand is harder to measure, Wachter said.

“The amount of people who walk through the door shopping for houses does not necessarily indicate that there is a huge amount of people out there who want to buy houses,” he said. “Even if there were, we don’t know if they are qualified for a mortgage and if they are able to buy. This is always a hard thing; based on market we can see supply, but really knowing what the demand is is a lot harder to judge.”

Many millennials in Madison are dealing with debt, specifically student loan debt. The demographic also favors amenities typical of center city living, which means paying a lot for rent. That doesn’t create an ideal scenario to save for a down payment on a house. There is an aversion to commitment out there among millennials that stems from the notion that they are not ready financially, Wachter said.

Nu’Man agreed that many people are not looking to get their mortgages in the same way that they did 10 or 15 years ago. But it seems like a lot practices are still operating in the same way they did before the mortgage industry collapse in terms of how mortgages are being originated.

“The type of loan products that were available at the time… low/no (documentation) loans attracted certain people because they required minimal proof of ownership of anything. There was a higher rate of acceptance in terms of you being qualified for the loans,” he said. “Because those loans are not in the market (now) in the same way they were, then you might have people less willing to go through the process of originating a loan because they may not have that same level of confidence.”

An audience member wondered about whether the current market, where buyers are routinely paying $20,000 more than asking price for houses that often accept offers in under a week, is showing signs of a bubble about to pop.

As Madison as it gets: Get Cap Times' highlights sent daily to your inbox

Realtor Liz Lauer said she thinks buyers Madison are relatively safe. Her group will sell about 200 homes this year — half from listings — and she estimates about 15 will be for a price significantly above appraisal, forcing buyers to bring extra cash, in addition to a down payment, to secure financing.

Wachter pointed out that certain parts of the city are hotter than others, however, and it’s still possible to buy a house without engaging in a bidding war.

“We’ve been talking about Madison as this one market, but really there are different things happening in different parts of the city,” he said. “In some parts of the city there are just not a lot of transactions, The values for houses in some areas haven’t come roaring back the same way as the near east side and the near west side.”

He also said life factors may lead to more millennials entering the market in a few years, causing them to seek out neighborhoods less known for bars and restaurants and more for traditional magnets.

“People still want houses at the same rate they used to want houses, but people want flexibility,” he said. “Those things that trigger buying a home, like coupling up, having a kid, and those decisions are being more delayed now that before… if there are amenities in a neighborhood like schools, parks, and attractive establishments, those neighborhoods are always going to be more attractive to buyers.”