Millennial magnet

Madison is a great place for young adults. If you can afford to live here.

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It looked like somebody had punched a hole in the front door of the first apartment we toured in Madison. Like, seriously — anyone standing in the hallway could look straight into the living room. The property management company hadn’t bothered fixing it before showing the place to prospective tenants, and the 20-something leading the tour shrugged it off as no biggie, assuring us that it would be “patched up” before we moved in.

That was the first sign that Madison’s rental market was tighter than my girlfriend Abby and I expected when we flew out from northern California to hunt for an apartment in July 2018.

A variety of horrors arose as we toured a total of 17 apartments in three days — a kitchen counter so small that balancing a single cutting board would have been an accomplishment, several different laundry rooms that looked like a serial killer’s basement, one blatantly creepy landlord who seemed the type to install hidden cameras in our shower. In a classic-looking Victorian house on Baldwin Street, the apartment’s only toilet faced a door that opened into a hallway shared by other tenants. We toured another place on Monroe Street occupied by a hoarder, and the property manager urged us to “imagine the space” without cardboard boxes stacked to the ceiling.

When we finally found a place we liked on Spaight Street, it was scooped up by a couple of college students who had toured it right before us. Nearing despair, we stumbled upon a two-bedroom apartment with a view of Lake Monona for $1,500 a month — about $300 more than we had anticipated — and felt super lucky to have found a decent place at all.

We weren’t the only people looking for a place to live in Madison, it turned out. Many come for the university, like Abby. Others, like me, work remotely and can choose to live where they want. Still more are drawn by one of the strongest health care- and tech-based job markets in the country. Whatever their motivation, young adults are moving to Madison by the tens of thousands. A recent analysis conducted by the National Association of Realtors found that of the largest 100 metros in the U.S., Madison is the top destination for millennials. Of people who moved here within the last year, three of four were born between 1980 and 1998, the highest percentage in the nation.

All of this is occurring within the context of a major urban migration away from supercities and the nationwide revitalization of midsized metros such as Boise, Fort Collins, Nashville and Fayetteville. In a reversal of John Steinbeck’s Dust Bowl-era classic, thousands more people are moving from California to the Midwest than the other way around. Mick Cornett, the former longtime mayor of Oklahoma City, calls it “The Wrath of Grapes.”

Madison’s transformation into a millennial mecca is greatly impacting local businesses, the rental and real estate markets, and the overall economy. “We’ve reached the point where Madison is known as a place people want to live,” says Paul Kundert, president and CEO of UW Credit Union. “We’re self-sustaining in terms of growing in reputation. More growth creates more jobs. I think the implications are strong, economically.”

The city’s booming population also comes with less desirable impacts on issues ranging from transit to social equity, and there’s growing concern that gentrification, new development and growing economic disparities will change Madison for the worse. City leaders are calling for a broad range of strategies, such as adjusting zoning standards to allow for more development of affordable housing and retaining subsidies for existing units.

“Lots of people are feeling the effects of gentrification,” says Ald. Marsha Rummel, whose district covers a portion of the rapidly developing east side. “The city has been trying to incentivize affordable housing, but if you tear down everything and build brand new, it’s not going to be cheap. I don’t care what anyone says.”

Renting here is already escaping the reach of many families and young professionals, with the median cost of rent rising at nearly four times the rate of inflation, according to the recently released Equitable Development in Madison report. And millennials keep pouring in.

So what’s the deal? Why are so many young-ish adults moving to Madison? Employment opportunities and relative affordability seem to be the primary drivers. In fact, Madison has the lowest unemployment rate (2.3 percent) of the 100 largest metros, and wages — especially for employees at software companies like Epic Systems — are relatively high.

“In comparison to other areas, Madison offers one of the highest wages for millennials,” Lawrence Yun, National Association of Realtors’ chief economist, says in a statement. “This income level, combined with the robust employment opportunities and affordability, make Madison among one of the most appealing locations for millennials who are looking to stay longer and raise families.”

As of 2017, the median income for millennials here was $62,000, and $68,500 for those who had recently moved to the city, according to the analysis by the National Association of Realtors. It also finds that almost 30 percent of the homes listed for sale in Madison are affordable on a millennial income, compared with 9 percent in Seattle.

They aren’t coming purely for financial reasons, though. Quality of life matters, too. Madison feels more manageable than the two other metros Abby and I considered — Seattle, Washington, and Austin, Texas — while still offering what we want from city living.

Jessica Billman feels similarly. Originally from Iowa, Billman, 37, earned a degree in fashion from a private art school in Florida and “paid way too much for my education,” she says. She was working as a designer for Venus Swimwear in Jacksonville when a recruiter floated the idea of relocating to work at Lands’ End in Dodgeville.

“When the recruiter called me, I was like, ‘Wisconsin? Oh, heck no,’” she recalls. “I never saw myself moving back to the Midwest. But all my friends said Madison was the nicest city in the Midwest, that it’s very metropolitan and forward-thinking.” And her impression improved when she flew out for a visit last October. She was struck by the beauty of the downtown skyline. “Coming from Florida, where there’s water everywhere, it kind of felt like home. It’s a very pretty and clean city.”

Lands’ End made her an offer she “couldn’t turn down,” and she moved to Madison in December. She feels lucky to have found a two-bedroom condo on the west side after searching for just a few weeks.

“I’ve never lived in a place where even the crappiest places don’t stay on the market for 14 days,” she says. “You have to be so quick. It was mind-blowing to me. But now I take it as a good sign. Ideally, I’ll make money when I sell my condo.”

Nearing the midway point of a two-year work contract, Billman is considering staying in Madison long term. She appreciates the low cost of utilities and relatively affordable home owners’ association fee at her place, though some aspects of her living situation aren’t ideal. She’d prefer to live in a more walkable neighborhood downtown or on the near east side, but that would stretch her commute even longer than the 45 minutes she drives each way.

“I’d say the west side of Madison is very chain-y, in terms of restaurants,” she says. “I go downtown for the local, smaller businesses. That’s what I’m into.”

Millennials are driving the resurgent interest in urban living across the country. They just aren’t all that stoked on the idea of living in a McMansion in the suburbs, miles away from restaurants, bars and coffee shops. They want walkable and bikeable neighborhoods, good schools and parks, and multiple transportation options.

Kundert observes as much at UW Credit Union. “When you look at millennial buying preferences, they want smaller houses in great locations,” he says. “That could be great for Madison in terms renewing and redeveloping the houses that are linked, on the pedestrian scale, to all the great amenities we have in the greater Madison area.”

Local businesses are weighing what millennials want more than ever. Veridian Homes, which annually builds about 550 houses in Dane County, has squarely oriented itself toward the young professionals moving to Madison in such great numbers.

“There’s no question about it,” says John Maasch, vice president of sales and marketing. “Knowing our buyers now are mostly between 23 and 38 years old, they absolutely have become our target demographic. We have tried to figure them out and give them what they’re looking for, and I think we’ve done a nice job with that.”

Veridian has poured most of its marketing dollars into its online presence, making its website social-media friendly and pretty like Instagram. The company recently rolled out an online feature called MyBuild that allows users to customize their future home from their couch or a coffee shop — precisely the way millennials do research.

“It allows them to get as much information as they want before talking to anybody here,” he says.

UW Credit Union is riding the millennial wave as well. Each year, the cooperative opens between 10,000 and 11,000 new accounts, mostly for younger customers. About 58 percent of its customer base is under the age of 38.

“It’s a huge part of our business, serving the financial needs of younger people,” Kundert says.

More than half of UW Credit Union’s employees are millennials. The company has made a concerted effort to attract young, tech-savvy workers.

“Every business, as an employer, is trying to win the war for talent,” he says. “In a competitive environment, it’s hard to recruit those knowledge workers. Competing for millennial talent takes a specific strategy of understanding what they want from employment.”

As the first generation of Americans defined largely by racial diversity, millennials want to see that reflected in their workplaces. They also want benefits like paid maternity and paternity leave and the flexibility to pursue work-life balance, as opposed to their parents’ nose-to-the-grindstone mentality. Kundert himself is a young baby boomer, and views the millennial mindset as “upside down” from that of his generation. “We were more about working and getting paid to acquire material things,” he says. “A lot of our aspirations were based around, ‘Hey, I want a second home or a boat.’”

Perhaps due to the financial pressures they’ve been under since forever and their astounding amount of student debt, millennials have delayed big purchases and adopted different priorities at work.

“Millennials are motivated by results and accomplishments,” Kundert says. “There is a desire to lean in and contribute, but there isn’t this idea that I should do this grunt work for years before I have an impact contribution.”

They also expect their workplace to operate sustainably, both in terms of environmental impact and the way it treats people.

“It helps that we’re a socially oriented organization,” Kundert says. “We’re not for profit and we’re mutually owned by our members. We have alignment from our business — providing financial services — and doing social good, which is improving the financial wellbeing of people. Values really matter to millennials.”

And not just in the workplace. Social and environmental responsibility were high priorities for Christine Goding-Doty during her search for an apartment last August.

After receiving her doctorate in African American studies at Northwestern University, she moved from Chicago to Madison to pursue postdoctoral research at UW-Madison’s Center for the Humanities. Relative to Chicago and her home city of New York, rental prices “were like a dream,” she says.

“I was really selfishly excited about all the new construction,” she says. “In Chicago, I was in a really old, quote-un-quote charming building. I was changing vents on the steam radiators myself, caulking the floor in the kitchen, doing all the home repair on my own. So, I appreciated a newer apartment. I could see the city here is shifting, and being from New York, I’m really sensitive to what waves of gentrification mean for a place.”

Goding-Doty and her father made a point of asking property managers what each site looked like before the building went up. “My dad was mostly asking whether there were a bunch of people in single family homes who got pushed out to build these high rises, but we didn’t get straight answers from anybody,” she says. “We did our own research and found that much of what had been on the isthmus was industrial buildings and auto repair shops, places that produced a lot of environmental contaminants.”

She settled on a building that, to her knowledge, hadn’t displaced residents or been constructed on “dumping grounds for barrels of battery acid.” Her place is on Doty Street, coincidentally named after her ancestor James Duane Doty, a land speculator who developed Madison in the early 19th century. It seemed like a sign that she was in the right place, even though it’s made her mail sort of confusing.

“Everything is addressed to ‘Doty’ in my building!” she says, laughing. 

Goding-Doty digs living in Madison’s densely populated downtown core. Her office is a 15-minute walk from her apartment and everything she needs day-to-day is close at hand — a level of convenience she expects, considering how much pressure people her age feel from nearly every other angle.

“I feel like a lot of things inform the decisions our generation makes,” she says. “It’s like, okay, if we’re left in the wild to fend for ourselves in terms of health care and job prospects and the economy, at least give us a bikeable, walkable city that has independent restaurants, where not everything is a chain and there’s a big farmers’ market.”

Darcy Haber, owner of Solidarity Realty on Williamson Street, hesitates to generalize about millennials, who, with their supposed fickleness, have been credited with ruining everything from napkins to department stores.

“It’s hard to take a population between the ages of 21 and 35 and say there’s something consistent about all of them,” she says. “Often, we’re saying there’s something consistently wrong with them.”

Roughly 35 to 40 percent of Solidarity’s customers are first-time homebuyers. (On average, people in the U.S. buy their first home at 32 years old, an age now smack-dab in the millennial generation.) Haber has observed that many of the millennials who move to Madison do so because they have the tools to look up the best places to live.

“Their comfort with researching an issue on the internet, we didn’t have access to that,” she says. “There are measurements and calculi they can put into a spreadsheet and weigh the pros and cons, and they end up moving here because we are one of the top places for quality of life for the dollar.”

It’s all relative, of course. Brian Bockelman, 34, recently relocated his family from Lincoln, Nebraska, to take a job as an associate scientist with the Morgridge Institute for Research, and experienced a case of sticker shock when he and his wife started looking for houses online.

“One of the professors I worked with at [University of Nebraska-Lincoln] liked to say that Lincoln is a poor man’s Madison,” he says. “That took on a new meaning when I started looking at house prices. … In Lincoln, a $400,000 house is just short of a mansion. Affordability was one thing that drove us out into the suburbs.”

Though they would have preferred to live in a more urban setting, the Bockelmans — who have young children and weighed school districts heavily in their decision — settled in Verona. “You pay for that, in the suburbs,” he says. “Something is lost by living somewhere you have to drive 45 minutes to get to work.”

His family enjoys many aspects of living in a bigger city, however. “Madison has that much more of a foodie scene, more farmers’ markets. The cultural things we enjoyed in Lincoln are x-percent bigger here,” he says. “We basically live outdoors once the weather turns nice and we really like the bicycle culture here. I hadn’t filled up my tires for a decade and now I’m getting my bike tuned up.”

As a recent homebuyer, Bockelman isn’t overly concerned with the long-term implications of the millennial migration to Madison, though he acknowledges that sprawl, gentrification and affordability will only become more pressing issues. Like many locals, he doesn’t want to see Madison become the next Seattle or San Francisco. 

“That’s the left turn you hope we don’t take,” he says. “If housing prices get worse, then the city’s problems will really start to compound.”

Haber used to see seasonal surges of incoming residents, but now Solidarity is hard-pressed to maintain inventory for its customers year round. On a personal level, she isn’t keen on seeing the city turn into someplace bigger, less affordable and more hectic.

“I’m not a fan of big cities with a fast pace,” she says. “I hope that we have elected the right leaders to prevent that from happening. We need to maintain Madison’s small-city vibe while still welcoming all the people who want to be here.”

After all, it’s not so bad to be known as a place that appeals to people like Abby and me — people who had a choice, and chose Madison.

“It’s a great problem to have,” Haber tells me. Then she leans forward and says, half jokingly, “So, are you thinking about buying a house?” 

[Editor's note: This article incorrectly identified John Maasch as the owner of Veridian Homes. He is the vice president of sales and marketing.]