Wisconsin isn't building new housing fast enough, Policy Forum report finds

Home prices and rents have surged statewide since the pandemic, and relief isn't coming fast enough.

That's according to a report from the Wisconsin Policy Forum, which found that despite pushes from lawmakers — and strong demand from homebuyers and renters alike — Wisconsin still isn't building enough new housing.

Since the Great Recession kneecapped the state's homebuilding industry, Wisconsin hasn't added enough new apartments, condos and single-family homes to keep up with demand, which in turn has pushed prices up. And after a surge in construction in the early days of the pandemic, homebuilding has stagnated, the report found.

The soaring cost of housing "is a glaring indicator that the state’s housing inventory remains insufficient to meet demand," the report said.

Labor shortages, higher interest rates, higher materials prices and unpredictable permitting processes are among the many factors standing in the way of new construction, the report found.

Here's what to know:

Milwaukee saw slowdown in construction, while Madison boomed

Between 2021 and 2023, the Milwaukee area saw a slowdown in new apartment construction, compared to the three years before the pandemic, according to the report.

Construction of single-family homes in the Milwaukee metro held flat, despite strong demand from first-time homebuyers.

"Home and rent prices have soared in metro Milwaukee since the pandemic, and the lack of permitting suggests there is little new housing in the pipeline to help ease the supply crunch and control price increases," the report said.

Madison, the state's hottest housing market, is a different story. Since the pandemic, the Madison metro has seen a 77.8% increase in building permits for new multifamily, the report found.

Still, Madison has seen a decline in single-family home construction, even as Madison-area home prices continue to rise. Between 2021 and 2023, permits for new single-family homes in Madison fell by 4.3%, compared to the three years prior to the pandemic.

Apartment construction has been much stronger than single-family

Across the state, new single-family homes are particularly hard to come by.

Since the Great Recession, developers have cut back on construction of new single-family homes, and the industry has shifted toward building more apartments.

Between 2021 and 2023, the rate of single-family building permitting was 53.6% the peak of the pre-Recession construction boom, according to the Wisconsin Policy Forum's analysis.

The shortage of single-family homes is making it hard for first-time homebuyers — especially millennials and Gen-Zers with young families — to find a starter home.

Lawmakers should take a kitchen-sink approach to housing, report says

There's no single solution that will eliminate the construction bottleneck, the report found. A complex set of obstacles — some local, some national and some global — are to blame.

State lawmakers could take steps to "bolster the state's construction workforce," which has dwindled over the years, the Policy Forum suggested; they could also enact tax breaks and regulatory changes to lower the cost of construction.

Local lawmakers, too, could do more to boost housing supply in their communities, the report said: Local officials could change zoning codes to allow more construction; they could also make their permit review processes more predictable, quicker and less costly.

"Some of the biggest factors at play, such as interest rates and construction costs, largely are beyond the scope of state and local policymakers," the report said. "This makes it all the more important for them to pull the levers within their reach to make housing more affordable for all Wisconsinites."

This article originally appeared on Milwaukee Journal Sentinel: Wisconsin isn't building new housing fast enough, Policy Forum report finds