Madison, Wisconsin The Madison metropolitan area, located in south-central Wisconsin, includes Dane County. Madison, the State capital and home of the University of Wisconsin, has been rated by various sources as one of the best smaller cities in the Nation. In August Dane County had the lowest unemployment rate of any county in the State, 2.5 percent. The metropolitan area’s annual unemployment rate was below 2 percent from 1995 through 2000. After an average annual growth rate of 6,700 jobs from 1990 to 2000, the area’s increase in nonagricultural employment slowed to 6,100 jobs in 2001. Continuing a long-term trend, service-producing industries in 2001 outperformed the goods-producing sector, with the service sector increasing by 3,500 jobs and goods-producing employment declining by 2,400 jobs. Nonagricultural employment for the 12 months ending in August 2002 increased by 1,200 jobs compared with August 2001, bringing total nonagricultural employment as of August 2002 to 296,600 jobs. Population in the Madison metropolitan area as of the 2000 census was 426,500, up 59,400 people, or 16 percent, since 1990. During the 1990s Madison, with approximately one-half of the county’s population, grew 9 percent to 208,100 residents, an increase of 16,800. The State’s Department of Workforce Development estimated that approximately 50 percent of the county’s population growth was attributable to net in-migration and the other half to natural increase. Since the 2000 census, population growth in both Dane County and Madison has continued to increase at rates similar to those of the 1990s, according to local estimates. As of January 1, 2002, the population of the Madison area totaled 438,900, and Madison’s population totaled 213,700. Over the past 3 years single-family permit activity in the county showed continued strength, increasing from 1,825 homes in 1999 to 2,000 homes in 2000 and 2,325 in 2001. This high volume of growth continued into 2002. During the first 9 months of 2002 permits for 1,725 homes were issued, up 10 percent from the same period in 2001 and 28 percent from the first 9 months of 2000. Nearly three-quarters of the activity has been in Madison, Sun Prairie, Vernon, Waunakee, and the unincorporated portions of the county. Single-family home sales in the metropolitan area for the first 8 months of 2002 showed continued strength because of economic growth and low interest rates on home loans. Sales of new and existing homes through August 2002 totaled 3,650 units, up from 3,550 homes in the first 8 months of 2001. Since 1998 sales activity has been the strongest in the county’s history. New home sales accounted for approximately 20 percent of the sales volume according to the local board of Realtors. Reflecting the strong demand for new and existing homes, home prices have risen significantly. The median sales price in the area was $186,000 in August 2002. The local condominium market also has been strong, with sales for the first 6 months of 2002 at 600 units compared with 525 for the first half of 2001. Prices have escalated as well with the median condominium sales price for the second quarter 2002 at $141,900. According to the 2000 census, the rental vacancy rate was 4.2 percent for the Madison area and 3.9 percent for the city of Madison. Recent surveys report some loosening in the rental market. A survey by the Madison Gas & Electric Company showed the vacancy rate increase during the past 2 years from a 3.8-percent vacancy rate in the third quarter of 2000 to 4.5 percent as of the third quarter of 2002. According to the Madison Area Apartment Association, the increase in the apartment vacancy rate is at least partially because of the strong sales market. The low mortgage interest rates, the relatively affordable prices, and the perception of a home as a preferred form of investment have led increasing numbers of renter households to purchase homes. As a result, demand for rental housing has been less than expected given the strong local economy. Since late spring 2002 landlords have experienced increasing difficulty in filling vacancies, according to the local apartment association. In response approximately one-third of rental projects in the Madison area are offering concessions ranging from one-half to a full month’s free rent. Units with rents of more than $1,500 are having severe problems maintaining occupancy, and even those with rents in the $600 to $800 range are having difficulty. New projects in initial occupancy have been able to lease up on schedule but typically only by offering concessions. Between 1990 and 1999 multifamily building permit activity in the metropolitan area averaged more than 1,500 units annually. In 2000, 2,000 multifamily units were permitted followed by a peak of 2,500 units in 2001. The recent slowdown in the growth of rental demand, and subsequently, more competitive market conditions have prompted builders in the metropolitan area to cut back. For the first 9 months of 2002 multifamily units authorized by permit totaled 1,287 units, down by 20 percent from the same period in 2001. Two-thirds of the units authorized in 2001 were in the city of Madison, and one-quarter were in Sun Prairie, Vernon, and Fitchburg. According to F.W. Dodge data, an estimated one-third of the multifamily units built in Madison since 1999 were condominiums. Downtown Madison has been an especially strong market for condominiums, especially among professionals and retirees. Of the 3,800 multifamily units authorized in Madison since 1999, more than 500 were designed for the elderly in developments ranging from independent rentals to assisted living.

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