By Kim McDarison
A 91-page study analyzing the condition of housing inventory throughout Jefferson County was released in February.
Among its findings, the study concluded that the Jefferson County housing market “shows signs” of a shortage, with significant shortages within the area of “affordable housing.”
In Fort Atkinson, the study found that the city likely is to have a housing shortage of some 379 units developing over the next 10 years.
The study, which was commissioned by Jefferson County and conducted by the Fiscal and Economic Research Center (FERC) — an analytical branch operating from within the University of Wisconsin-Whitewater, and led by principal researcher Russell Kashian — looked at housing conditions across the county and within its municipalities, including Fort Atkinson and Whitewater.
A similar study was conducted by the FERC in 2019 focusing specifically on Fort Atkinson.
That study concluded: “There is significant evidence of a shortage of owner-occupied housing in the City of Fort Atkinson; This shortage likely affects home values in all income tiers in a similar way; This shortage may be affecting single-family homes more than two-family homes; (and) the number of currently platted, but undeveloped, lots would likely provide enough housing to achieve equilibrium in the current market, if developed in a very short timeframe.”
The new document, examining the full county, can be received by submitting a form through the Jefferson and Dodge Counties THRIVE Economic Development website: https://www.thriveed.org/data-center/research-and-studies/.
The countywide report covers three main areas: Jefferson County single-family housing supply, affordability and demand; Jefferson County multifamily housing analytics; and housing analytics of the municipalities within Jefferson County.
“Major findings and conclusions,” as outlined within the report, note that the “entire Jefferson (County) housing market shows signs of a shortage.
“Policy changes that address this disequilibrium may improve the health of the housing market and prevent the current housing shortage from compounding,” according to the report.
The report further notes the existence of a “significant shortage of housing that is affordable to income constrained households.”
Jefferson County single-family homes supply and demand
An overview of housing supply and demand was developed, the report states, by analyzing such metrics as the availability of housing on a monthly basis and home prices.
“The months’ supply of housing and price of homes over time both indicate high demand for housing in the county which is not being met by current supply,” the report indicated.
The high demand and lack of supply is compounded when looking specifically at affordable housing, it continued.
Looking at supply and demand for affordable, owner-occupied homes in Jefferson County, the report concluded that people in the market for affordable homes “face few options and command little bargaining power.”
The conclusion was developed after reviewing monthly homeowner housing costs as a percentage of income, against statistics associated with United for ALICE (Asset Limited, Income Constrained, Employed) households.
United for ALICE is a collaborative partnership organization working to identify and articulate the needs of vulnerable populations. The initiative works with local chapters of the United Way and other nonprofit groups across 21 states, including Wisconsin, the organization’s website states.
In addition, the study looked at change in demand for owner-occupied housing within the county, looking specifically at 5- and 10-year intervals between 2020 and 2025, and 2020 and 2030.
The Jefferson County housing study uses, among other resources, metrics published in 2019 in the “Population Projections and the Outlook of Jefferson County’s Homeowner Housing Market” report.
Responding to questions by telephone, Kashian said that the 2019 report was produced by the Wisconsin Department of Administration (DOA) and analyzed the projected change in demand for owner-occupied homes.
That, and other DOA-produced materials, were used to develop household growth projections within the newest FERC analysis, which concluded the following: housing demand in Jefferson County is projected to increase by 1,312 owner-occupied units between 2020 and 2025, and by 2,592 units during the longer, 10-year period between 2020 and 2030.
Looking at statistics relative to new housing construction, building permits, and population growth, among others metrics, the analysis indicated that, without intervention, the current shortage will continue.
Jefferson County multifamily, supply and affordability
Within the renter-occupied, multifamily housing analysis section of the report, analyses focused on “any housing where rent is collected.”
Offering a historical, statistical overview, in 2019, the report stated, some 30 percent of Jefferson County households were occupied by renters. The number has “remained relatively constant over recent years.”
In 2019, the median household income for renters was $40,532. The median rent in the county was $857 per month or $10,284 per year, equating to 25 percent of renters’ income.
Comparing the Jefferson County rental market with that of Wisconsin, the report notes some differences.
“It appears to be more affordable,” it stated.
Statistics included within the report noted that in Jefferson County, about 41.5 percent of households spend 30 percent or more of their income on rent. In the State of Wisconsin, 44 percent spend a similar percentage.
The report further noted that the highest concentration of rental households spending 30% or more on housing costs fall below the rental household median income.
In conclusion, the report noted, while rental supply and demand over the last several years has been stable, both the number of renting households and the quantity of newly built rental units have remained low.
Further, the median rental price in Jefferson County has appreciated 10.6 percent since 2015, which has served to outprice those seeking homes in Jefferson County.
“The data suggests a need for additional cost-effective rental units targeted to households earning less than the 2019 median rental income of $40,532,” the reported stated.
Housing analytics within the municipalities of Jefferson County
While data within the first sections of the report looked at the county as a whole, data looking specifically at municipalities within the county also was collected and analyzed.
While limited data was available in some smaller municipalities, and some municipalities overlap the boundaries of other counties, similar housing trends as those found in Jefferson County overall were evident within the municipalities, according to the report.
Looking at trends common among the area’s municipalities, the report stated: “The supply of available single-family homes in all the municipalities has diminished considerably over the last five years.”
The effect largely is created by a lack of homeowners placing homes on the market, Kashian explained.
Looking more deeply into the supply-and-demand relationship, the report noted that the municipalities have low monthly inventories and high home price appreciation.
“New housing supply has not been able to keep pace with increasing housing demand,” the report stated, adding that construction rates for housing have been low as compared with projected household population growth.
Looking at ALICE household thresholds, developed to identify the cost of needs as compared to their affordability for income-constrained and vulnerable populations, the municipalities have a heterogeneous or varied distribution, according to the report.
It cites as examples statistics from the Village of Johnson Creek and City of Lake Mills, both of which have 30 percent of their households showing resources below the ALICE threshold, as compared to Watertown, which has 46 percent of its households living below the ALICE threshold.
United for ALICE thresholds
United for ALICE metrics are used to measure financial hardship endured by residents within counties and states, the report noted. The metrics help identify segments of the community who struggle to afford basic necessities.
United for ALICE data offers a look into the distinctive living situations in Jefferson County by taking into consideration the cost of living in Jefferson County, as well as different states, counties and municipalities.
The ALICE threshold, as defined within the report, is “derived from the Household Survival Budget, a standardized budget used by ALICE to measure the cost of living in a particular community. The Household Survival Budget estimates the minimal cost of the five basic household necessities: housing, childcare, food, transportation and healthcare, to formulate a monthly budget that covers essentials, taxes and an additional 10 percent for miscellaneous needs,” the report stated.
Households operating below the ALICE threshold fall short of having enough income to meet basic identified necessities. ALICE data developed in 2018 suggests that households comprised of two adults and two school-aged children living on less than $56,976 annually will struggle to find adequate housing they can afford.
For residents living in Jefferson County, ALICE thresholds include: $21,528 for a single adult; $34,092 for two adults; $72,468 for two adults with two children in childcare; $23,628 for a single senior citizen, and $37,644 for two senior citizens.
Basic housing needs for household size assumed by United for ALICE are as follows: single person, an efficiency apartment; one or two adults with a child, one-bedroom apartment; a household with three or more people, two-bedroom apartment.
Monthly housing costs allocated by ALICE are as follows: single adult, $527; two adults, $618; and two adults with two children, $822.
In Jefferson County, of the 14,718 single or two-adult households, 4,080 are below the ALICE threshold; of the 9,338 households with children, 2,602 are below the ALICE threshold; and of the 9,124 senior households, defined as one or two residents at least 65 years old, 3,825 are below the ALICE threshold.
Those living below the ALICE threshold must find housing below the fair market rent rate or cut back on other necessities, the report continued.
Jefferson County population and number of households
U.S. Census statistics released in 2019 estimated the population of Jefferson County at just under 85,000 people. The DOA-developed households projections estimated a need for approximately 36,000 households countywide by 2020.
The DOA, according to the report, projected the number of households in Jefferson County would increase by 12 percent between 2010 and 2020. According to the American Community Survey included within the U.S. Census, households in Jefferson County have only grown by 4.8 percent between 2010 and 2019.
A breakdown of the 35,818 housing units in Jefferson County are as follows: single-family housing including one unit, 26,385, or 73.7 percent; multifamily, including two units or more, 7,762, or 21.7 percent; and mobile homes, 1,661 or 4.6 percent.
Of the total number of housing units in Jefferson County as of 2019, 32,965 are occupied. Of those homes, 23,126 (70.2 percent) are owner-occupied and 9,839 (29.8 percent) are renter-occupied.
Lots and permits
According to the report, Jefferson County saw a decline in construction rates during the recession of 2007-09. Rates have been increasing slowly since 2011, but have not returned to pre-recession levels.
In 2019, as measured by the number of building permits pulled, 250 housing units were planned for construction. In 1999, that number was 551 units.
Numbers associated with subdivision plats and lots show a similar trend in Jefferson County, the report continued.
While fewer units were being built, the report showed, the median gross rent was rising. In 2015, the median rent was $775. By 2019, it was $857.
Affordability
When compared with the state, as a percentage of household income, the report notes that rental costs in Jefferson County are more affordable.
According to the U.S. Department of Housing and Urban Development (HUD), housing is affordable when it costs 30 percent or less of a household’s income. When applying that standard, the percentage of affordable housing in Jefferson County is 58.5 percent as compared to the state which is 56 percent.
In Jefferson County, 3,828 renters are spending 30 percent or more of their household income on housing costs.
In 2019, Census data showed, the median household income level in Jefferson County was $71,108. The median income of rental housing occupants in Jefferson County was $40,532.
Fort Atkinson
Looking specifically at Fort Atkinson, the report found the following: that the city had a low rate of home appreciation in 2019, showing an estimated 20.5-percent increase in median single-family home value. Home values appreciated at a slower rate than the rest of Jefferson County.
The median home sale closing price in Fort Atkinson was $170,000 in 2016 and was $214,200 in 2019.
Homes sell quickly in Fort Atkinson, the report noted, adding that the market is below the threshold for an “optimal” month’s supply within a balanced marketable inventory.
Forty-one percent of Fort Atkinson’s total number of households (4,954) were below the ALICE threshold in 2018.
According to the report, growth in the housing market in Fort Atkinson was “low,” which was indicted by the construction of only 34 housing units within the city since 2010.
“If new housing unit construction continues at this slow pace, the population will not grow,” the study noted.
Meanwhile, the DOA has projected an increase in households of 465 between 2020 and 2030; however, “the DOA projections have overestimated household growth over recent years,” the report stated. An adjusted estimate indicates Fort Atkinson will grow by 413 households, according to the report.
Still, the report noted, Fort Atkinson “is on track” to have a housing shortage between 2020 and 2030 of 379 units.
Whitewater
Looking at trends in Whitewater, the report noted that like Fort Atkinson, the city had a low rate of home appreciation in 2019, estimated at 22.2 percent. Home values within the city appreciated at a slower rate than Jefferson County as a whole.
Median home closing prices mirrored those of Fort Atkinson in 2019.
Homes sell quickly in Whitewater, according to the report, and like Fort Atkinson, the city has an inventory that is out of balance with an optimal market threshold.
Fifty-nine percent of Whitewater’s total number of households (4,616) were below the ALICE threshold in 2018.
Growth in the city was described as having occurred at “a lower increase,” due to several factors.
The report offered some history: in 2008, growth in housing units within the city was projected within its comprehensive plan, created by Vanderwalle and Associates. The plan was developed as the recession and the housing market collapse occurred, according to the report.
“This plan could not fully anticipate the challenges presented by the recession or by COVID-19,” the report continued.
A new projection was offered, predicting that from between 2014 and 2020, some 290 housing units would be built. According to numbers provided through the Census, some 242 units have been realized since 2010.
“Recent low rates of construction are not adequate to keep up with projected household growth over the next 10 years,” the report noted.
In Whitewater, the DOA has projected an increase in households of 966 between 2020 and 2030. Adjusting for a perceived overestimation on the part of the DOA, the report states, Whitewater is anticipated to grow by 782 households, putting Whitewater “on track” to have a housing shortage of 540 units.
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