A few years ago I read the article “Where Even the Middle Class Can’t Live Anymore” by Emily Badger and grew curious about how local families were being affected by rising home prices.
I began to wonder, “Where Can Dane County’s Middle Class Afford to Live?”
Affordability takes into account a variety of factors so using the local median income of $83,900 with an online calculator to estimate home affordability I determined the maximum purchase price for the majority of Dane County residents to be around $375,000.
Keep in mind this is the maximum, not a recommendation, as this number was based around the assumptions of 20% down (not easy for many middle class families), 3.75% interest rate, $7500 annually in taxes, annual home insurance of $700, roughly $500 per month in additional debts, and no more than 30% of monthly income going towards housing costs.
It should be no surprise that 3 of the 5 most affordable areas in Dane County are outlying communities bordering the edge of the area. It is typical to see prices drop as you move away from larger areas.
Edgerton tops the “Most Affordable” list with 100% of the homes currently on the market falling under the $375,000 threshold. Many homebuyers looking for an affordable option may not realize Edgerton’s quick access to Madison. You can easily reach Madison’s southeast side within a 15-20 minute drive.
Marshall and Belleville also make the list as affordable with over 85% of the homes in town falling within the affordability range to our typical home buyer.
If you aren’t familiar with the area you may not realize that East Madison is one of the more affordable places to buy a home with a current median home price of $209,000…well below the Dane County median of $262,000.
And while Sun Prairie made the list, it should be noted that the median list price for currently active homes is $289,900 – more expensive than other areas such as Monona, DeForest-Windsor, & Stoughton. Sun Prairie also barely squeaked onto this list with 83% of active homes considered “affordable” compared to 82% of homes in Stoughton. Numbers this close could shift within a week.
As expected Verona, Middleton-Cross Plains, Oregon-Brooklyn, Waunakee, and Fitchburg top the “Least Affordable” list.
What is a bit shocking though is just how unaffordable these areas are for most middle class families.
Middleton tops the list with only 24% of current inventory meeting affordability guidelines including a $520,000 median list price.
Waunakee is not far behind it’s neighbor with only 35% of active homes considered affordable and is the only other location on our list with a median asking price over $400,000.
Our other least affordable communities have nearly half of the homes in the market listed for sale above $375,000.
So what do all these numbers really mean? Where can Dane County’s middle class afford to live?
First of all, understand that outlying and smaller communities are going to be affected on a more dramatic basis over time simply because there are fewer homes to consider.
As an example, Mazomanie has two unique homes currently on the market. These two properties are the difference between a 60% and 80% affordability rate due to small sample size.
Likewise, the presence of properties just outside of larger towns in smaller municipalities such as Dunn, Bristol, or Vermont may have a big impact on the greater area as these properties often provide unique features like more acreage, custom designs, or waterfront.
If we were to look at just the larger communities we would see East Madison, Sun Prairie, Stoughton, DeForest-Windsor, and Mount Horeb round out our area’s most affordable list while the least affordable list would stay the same.
Also remember that these numbers simply reflect how much of the available inventory is priced within the affordability range. It is not a direct indicator of home values, but rather a reference for where you are going to find a higher percentage of available inventory priced below $375,000.
These numbers do not tell you where you can find the most options for affordable homes. Middleton-Cross Plains, despite having the lowest percentage of affordable homes, actually has 35 active properties listed under $375,000, at least twice as many as some of the more affordable communities including Belleville (12) and Marshall (15).
Ultimately, the numbers point to one basic trend. If you’re looking for a higher percentage of affordable homes in Dane County, it’s probably best to look east or towards the county’s border communities.
***Maple Bluff and Shorewood Hills were not included as stand alone communities in this analysis. Maple Bluff was included with East Madison and Shorewood Hills was included in the West Madison numbers.
***All data has been pulled from SCWMLS on 11/17/2016. Data reflects all homes listed under main municipality name through basic search criteria including smaller municipalities closely associated with larger areas.