Madison house values rise 7.8% this year, assessment shows (2024)

In an economic boom, Madison’s housing market remains robust. It’s cooled a bit from soaring spikes in values seen in the previous two years, but nevertheless just set a record with nearly $1 billion in new construction.

The value of the average single-family home, based on sales and other data from 2023, jumped 7.8% to $457,300 for 2024, a healthy rise but below the whopping 12%-plus leaps in 2022 and 2023. Only five years ago, the average home was assessed at $315,200.

In the last year, the city saw $949.4 million in new construction, topping the previous year’s record of $866 million — the third straight year the city has set a new high. Net new construction lets the city increase tax collections constrained under state law, but the amount usually doesn’t keep up with inflation. The city faces a $27 million operating budget shortfall for 2025.

“First, Madison’s economy continues to be robust,” Mayor Satya Rhodes-Conway said of the new data. “Second, there is strong demand for housing, particularly for home ownership, and a significant lack of supply, which means we have more work to do to create housing opportunities across our city.”

The new assessments, released by the city assessor’s office on Friday, show a 9.3% jump in the value of all real estate, which is vigorous but below last year’s 14.4% rise, the highest growth since the late 1970s and early 1980s. The city’s annexation of the town of Madison in October 2022, which added about 1,500 parcels to the city’s tax base, also helped drive up the value of local real estate the previous year.

“The 9.3% increase is a reduction from the prior two years but above pandemic and pre-pandemic percentages,” City Assessor Michelle Drea said. “The main factors driving the increase are sales and growth.”

“On the residential side, homes with entry-level price points have been selling at a rapid rate,” she said. “On the commercial side, our industrial class had the highest volume of sales. This includes warehouses, mini-warehouses, shops and other related uses. Additionally, we have had strong sales in land for redevelopment or development on the commercial side.”

“Madison’s high quality of life and excellent public services continue to make us an attractive place for people to live and for a wide array of businesses to locate,” Rhodes-Conway said.

Short of record

Commercial real estate, which includes multi-unit apartment buildings and other properties such as hotels, offices and retail buildings, rose 10.5%. Again, that’s healthy, but below last year’s leap of 16.8%, which was the most since a 20% increase in 1980, although the assessor’s office then used a slightly different method.

Within commercial properties, the value of apartments with 50 or more units jumped 16% to $5.6 billion, the largest percentage increase in commercial real estate.

“On the commercial side, the volume of sales is lower but still shows strong growth when sale prices are compared to assessed value, driving the overall increase,” Drea said.

But office space is undergoing change with the workforce moving toward more hybrid or fully remote work, she said.

“While office space will always be needed, smaller footprints seem to be more desirable at this time,” she said. “Much like the evolution of retail space in prior years, the office space landscape is undergoing change that will require ingenuity and flexibility.”

The value of single-family homes, condos and two- and three-unit apartment buildings rose 8.5%, less than the 12.9% increase last year. All residential classes increased between 7.1% and 9.1%.

A rising tide

Citywide, the value of single-family homes rose in every neighborhood, with 28 of 123 listed neighborhoods showing double-digit increases.

Three data points explain the 7.8% increase related to prior years, Drea said. Sales volume remains steady; sales prices are consistently above assessed value in spite of higher interest rates; and housing supply is well below demand, she said.

But overall number of sales, while steady, was down from prior years, which is slowing down the overall increase in value, she said.

Three neighborhoods had increases of 20% or more for the average home, led by the Woodward neighborhood on the north side of Lake Mendota with a 23.5% rise to $1.75 million, followed by the Summit Woods neighborhood on the Near West Side at 21.8% to $457,800, and the Burr Oaks-Lincoln School neighborhood on the South Side at 20.2% to $280,800.

Only three neighborhoods had increases under 3%. The Southeast Blooming Grove attachment neighborhood on the Far East Side increased 1.1% to $288,500, Hawks Landing on the Southwest Side rose 1.9% to $788,200, and the Cherokee neighborhood on the North Side edged up 2.9% to $531,100.

Once again, the city’s most valuable homes were on the lakeshore, led by the Woodard neighborhood at $1.75 million and Spring Harbor at $1.67 million.

For the new assessments, “we had sales in our lakefront neighborhoods that allowed us to analyze those areas more deeply,” Drea said.

Only five neighborhoods had average homes valued under $300,000. The most affordable was Brams Addition on the South Side at $252,500, followed by Fair-Oaks-Worthington Park on the East Side at $258,500, and Burr Oaks-Lincoln School on the South Side at $280,800.

Builders set mark

The city’s record-setting new construction is positive news for city officials amid the looming $27 million operating budget shortfall because state levy limits restrict how much municipalities can increase property tax collections.

The commercial class is the highest contributor to the record $949.4 million in new construction, Drea said. “Madison is an attractive spot for a vast array of businesses, which can be seen in the many projects coming online from multi-family housing to new hotels,” she said.

The $949.4 million in net new construction will allow for an estimated levy increase of 2.2%, or about $3.7 million, for operations in the 2025 budget, but the impact on individual taxpayers won’t be known until the City Council passes a budget and sets a tax rate in the fall, Finance Director David Schmiedicke said.

“While growth in property assessments reflects a solid economy and a growing population, it does not translate to commensurate increases in property taxes to fund schools, city and county services, and Madison College,” Schmiedicke said.

“Unfortunately, because of restrictions in state law, Madison taxpayers are not able to benefit from the full value of economic growth and new construction happening,” Rhodes-Conway said. “Nonetheless, the city has taken a range of actions to keep property taxes as low as possible, from reducing city staffing to the city’s Property Tax Assistance for Seniors Program, which provides low-interest loans to older homeowners living on a fixed income.”

The city faces major spending cuts, increasing revenues — possibly through a first-ever referendum to raise property taxes — or a combination of both to eliminate the budget shortfall next year, officials have said.

The city, which has a $405.4 million general fund operating budget for 2024, must balance its budget each year under state law. Even if the city closes the $27 million gap in 2025, it will face ongoing gaps of $7 million to $11 million, Schmiedicke said.

Challenging an assessment

Homeowners can discuss their property values during the city’s “open book” period from 8 a.m. Monday to 4:30 p.m. next Friday. Owners must contact the assessor’s office by email at openbook@cityofmadison.com or by phone at 608-266-4531.

After open book, if owners still want to object, they can file a formal objection by 4:30 p.m. May 3. To get an objection form, use the above contact information. All filed objections are reviewed and processed by the Board of Assessors. Assessments are set through mass appraisal, but the objection triggers an individual appraisal of that property. The board reviews all corrections to arrive at market value.

If owners disagree with the Board of Assessors, they may appeal to the Board of Review, a quasi-judicial body of appointed city residents who hear cases and make final determinations on value.

If still dissatisfied, owners may appeal Board of Review decisions to Dane County Circuit Court or the Wisconsin Department of Revenue.