Why there’s so much East Madison apartment construction

By Katie Pulvermacher, Eastside News

The increasing number of households in Madison has grown faster than the available housing units, leading to a significant increase in apartment construction to meet the rising demand.

“This imbalance is forcing more and more people who work and shop in Dane County to live outside of Dane County,” executive director of Smart Growth Greater Madison, Inc. Bill Connors said. “Housing prices and rents in Madison and Dane County keep rising in part because of this imbalance — and in part because it is more expensive to construct new housing anywhere and everywhere.”

According to the latest city growth projections, the city of Madison had approximately 134,800 homes at the start of 2025. It is expected to add over 9,300 new households holding around 18,400 people by 2030.

The phrase “housing crisis” has been adopted by some Madisonians to characterize the current situation, but is it really a crisis? Local experts provide opinions on the matter.

“Yes, I would describe it as a crisis, although it’s a slow-burning crisis that’s taken a long time to develop, so it’s not a crisis like a hurricane or sudden flood,” Kurt Paulsen, professor of urban planning in the Department of Planning and Landscape Architecture at the University of Wisconsin-Madison, said. “The crisis is that there is an overall shortage of housing available at every price point for everyone who wants to live here.”

Heather Stouder, administrative services manager of the city of Madison Department of Planning & Community & Economic Development, said nationwide, we’re experiencing a situation that many would call a housing crisis. While it is more significant in some cities and regions than in others, Madison is in the midst of it.

“Not enough housing has been constructed over the past 10 to 20 years to keep up with population growth, and housing is often too expensive for households to afford, whether they’re renting or seeking to own a home,” Stouder said.

Madison’s District 6 Alder Davy Mayer also sees a crisis.

“In an ideal renter’s or buyer’s market, one can find a property in a location they want, at an acceptable price point and with the amenities they want,” Mayer said. “In our current market, people must concede one or more of those points and sometimes all three.”

Where, why and how many?

According to the city’s housing tracker, Madison is aiming for the addition of 15,000 new homes — including apartments — during the five-year period between January 2025 and January 2030.

Paulsen said many apartments are being developed in Dane County and Madison due to strong rental demand driven by consistent job growth, as well as to address a decade-long shortfall in construction following the Great Financial Crisis of 2008, where Madison is now playing “catch-up.”

According to the most recent United States Census Bureau 1-Year Data, of the 133,564 occupied housing units in Madison in 2024, 74,964 were renter occupied and 58,600 were owner-occupied. That breaks down to 56% as renters and 44% as owners.

“Developers and builders will invest their private capital to provide housing in market segments that offer the higher post-tax, risk-adjusted returns,” Paulsen said. “Right now, for a variety of deep structural and public policy reasons, Dane County is more tilted towards apartment development than single-family home development, although there are a number of new single-family neighborhoods under construction around the region.”

He said when developers look for opportunities to build, they evaluate land availability, proximity to transit, proximity to jobs and schools that potential residents might value, zoning constraints and more.

Demand for physical retail spaces has declined due to online competition, and the need for office space has also decreased with the rise of remote work, Connors said. Consequently, many commercial and office properties are available for developers to buy and repurpose.

“There is tremendous demand for more housing, so redevelopment projects that are mostly or exclusively housing make the most sense,” Connors said. “Even though the old retail and office buildings are functionally obsolete, the land on which they sit is high-value, so the economics of redevelopment projects do not work unless the new development contains a higher density of housing units.”

Those behind the push for development

Stouder said ultimately, Madisonians are driving the push for new housing.

“The need for more housing of all types, and especially affordable housing, continues to be the input the city hears most from residents,” Stouder said. “However, the city itself builds only a small fraction of the housing we see. Each individual development or redevelopment is initiated by a developer investing in Madison’s housing market.”

Mayer said where there is demand for housing, developers follow.

“We have very low unemployment and many available jobs in Madison (not to mention our great amenities), which drives people to move here,” Mayer said.

Connors said the push for development is due to many businesses expanding and locating in the Madison area, including Epic Systems and Exact Sciences, which have turned the area into a “hub for new software and biotech companies.”

“The apartments are being constructed by the market in response to continuously growing demand for housing,” Connors said. “City and village leaders throughout Dane County recognize this situation and are changing comprehensive plans and zoning codes to enable greater housing density in the locations where it makes the most sense.”

Are the new housing developments affordable?

As noted in the city of Madison’s housing tracker, of the 15,000 new homes Madison aims to build by 2030, the goal is for 25% of these new homes and apartments to be subsidized affordable housing. Subsidized housing is government-supported, reduced rent or costs for low- to moderate-income individuals and families.

Mayer said everyone has a different idea of affordable housing based on their income and expenses.

“For subsidized housing, we use percentages of local median income, which locally is $90,900 for a one-person household,” Mayer said. “There are various thresholds we use for categorization, where people have 80%, 60% or 30% of median income, qualifying those for certain subsidized housing.”

According to the city’s online 2025 Housing Snapshot Report, half of Madison’s renter households are cost-burdened, paying over 30% of their income on housing, and about one in four Madison renter households pay more than half their income on housing costs.

Stouder said Madison’s housing vacancy rate is returning to a healthy level after years of being low. If housing supply meets demand, residents will have more options. While prices may not fall, there’s hope they will stabilize.

“City staff, policy-makers and community leaders understand how difficult it is for many Madisonians to find housing that is affordable to them and meets their needs,” Stouder said. “It takes a broad effort from developers, non-profit organizations, government entities and others to make a meaningful difference. The city will continue to support more housing production through city plans, policies and programs.”

How Madison’s housing situation compares with other metro areas

Paulsen said that when looking at Madison as a metro region, about half of Dane County’s population lives in Madison, while the other half resides outside the city. The Madison metro region also includes Columbia, Green and Iowa counties.

Madison’s housing costs are higher than those of similar cities due to demand, Mayer said, citing Austin, Texas, which faced a similar housing crisis. Increased housing construction in Austin over recent years has led to a decrease in average rents there.

Madison aims to learn from other metro areas, and Stouder said under Mayor Satya Rhodes-Conway, the city has implemented policies to facilitate the construction of new housing, including subsidized affordable options.

“(Madison’s new housing developments are) for the better,” Mayer said. “We do need to respect historic preservation, and having grown up in Madison, I’m as nostalgic as anyone, but healthy cities constantly undergo some amount of change.”