If the people renting all those shiny new apartments in downtown Madison aren’t interested in buying real estate, what impact might that have on the broader housing market?
It’s a difficult question to quantify given that no one is keeping stats on recent arrival home buyers per se.
“People who are more tempted to rent downtown are really opting for that more urban lifestyle,” says Chad Sperry, owner of the Condo Shoppe, a division of Restaino & Associates. “They aren’t looking to commit long-term.”
The broader housing market has clearly rebounded since the recession, with Dane County seeing 7,397 total sales in 2013, about 7 percent below the record 7,981 sales set in 2005.
At the same time, sales of lower-priced homes which are often considered the best gauge of first-time buying activity are still lagging a bit.
Figures compiled by Troy Thiel of Keller Williams show 2,564 sales of homes in the $100,000 to $250,000 price range last year in Madison, Fitchburg and Middleton. That’s about 26 percent below the number of entry level sales for those cities in 2005.
Thiel cautions against inferring too much from the data, however, noting that a lot of sales activity in the lower prices ranges came in Verona, Sun Prairie and Cottage Grove — areas not included in his analysis above.
Still, Thiel concedes that workers in technology fields, i.e. Epic Systems, are perhaps not the best market for selling a home or condo.
“There may be some truth to the millennials being less likely to buy right now,” he says. “It also has something to do with high-tech employees moving more frequently."
Epic’s impact on the local scene — the apartment market or otherwise — has sparked a lively discussion over the past few days. Alan Talaga in Isthmus this week asked whether Madison might see a backlash against tech workers like the one that has occurred in San Francisco, a topic explored in this week's Capital Times cover story, “Boom Town.”
For economic development officials, the question is: How do you get those new arrivals to put down roots here, investing in the community and adding to the tax base and school system?
“I actually think we will see some of these (apartments) convert to condos as that market rebounds and the inventory becomes tighter,” writes Ken Harwood, editor of Wisconsin Development News.
Harwood has long predicted that downtown living would become the hot new trend in Madison as both young professionals and empty nesters seek a more lively urban experience.
“Now the trick will be to keep the YP's and Boomers downtown,” he says. “We will need great schools, entertainment, heath care, grocery and lest you think I forgot, transportation.”
Anecdotally, Realtor Liz Lauer says her firm sold 15 homes to Epic employees last year and advises against painting with too broad a brush when considering the impact of Madison's emerging technology sector.
“What I’ve found different today is that people moving here don’t just grab a Realtor and buy something,” she says. “They want to feel like they have some liquidity and don’t know if they will be in the city that long.”
At the same time, Lauer says as younger people decide to stay here, get married or start having children, they will consider making a longer term housing investment.
“I feel like millennials will still be buying homes, maybe just not right now,” she says.
Editor's note: This story has been updated to give a correct percentage for the difference between Dane County home sales in 2005 and 2013.