Addressing Wisconsin's Housing Crisis: Insights from Prof. Mark Eppli's Keynote at the 2024 Economic Forecast Luncheon

Professor Mark Eppli of the University of Wisconsin-Madison highlighted the critical challenge of insufficient new home lot creation in Wisconsin during his keynote address at the 2024 Wisconsin Economic Forecast Luncheon in Madison. This event was sponsored by WisPolitics, WisBusiness, and the Wisconsin Bankers Association. Eppli, who leads the James A. Graaskamp Center for Real Estate, pointed out that the state's housing supply is significantly lower than in 2016, with inventory for sale reduced by 60% to 80%. This shortage is exacerbated by homeowners holding onto properties due to previously low interest rates; 71% of mortgages in Wisconsin have rates below 4%, much lower than current rates around 7%.

Despite an average mortgage payment in Wisconsin being less than the national average—$1,058 compared to $1,358—Eppli emphasized that the real bottleneck in the housing market stems from a dramatic decrease in new lot development. Annual creation of new finished lots has dropped from an average of 14,000 between 1994 and 2007 to about 3,500 since then. This decline has been influenced by stricter federal regulations on bank lending following the Great Recession.

Eppli suggested that to accommodate the annual addition of approximately 15,000 households, Wisconsin needs to be developing around 10,000 to 11,000 lots each year. He advocated for reduced risk in lot development through cooperation between municipalities and developers and mentioned that the Board of Commissioners of Public Lands could potentially provide alternative funding sources for these projects.

Addressing another aspect of the housing crisis, Eppli noted the modest income levels across most of Wisconsin, which limits how much residents can afford to pay for housing. He cited Sheboygan as an example where local corporations are helping support housing development to mitigate this issue.