Ready, willing, but not able

Millennials want to put down roots in Madison but many can’t afford the housing

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The Great Recession of 2009 derailed the budding careers of Deborah Hearst and her husband, Whitney Derendinger. Hearst, who is Generation X, and Derendinger, a millennial, relocated from Chicago to Madison and for a decade the couple built their careers living in the same two-bedroom apartment on Madison’s east side.

In late 2019, the couple was finally pre-approved to buy a house. They started looking and found a few homes in their price range. Then the pandemic hit, and hit their industry — live theater—particularly hard. Hearst was laid off, and Derendinger’s hours (at least on paper) looked like they had been cut. They lost their pre-approval.

“We couldn’t get approval for literally anything that was on sale in Madison,” Hearst says. “We could get $150,000 approval. That’s a plot of land with nothing built.”

Meanwhile their little two-bedroom apartment felt a lot more cramped with a toddler, Eden, and two adults working from home, especially in the early days of the pandemic when playgrounds were closed and children couldn’t play with others outside of their bubble.

“We would go to Tenney Park all the time and we’d walk up on that pier and [see] all those houses on Maple Bluff right there. And you can hear kids playing on their swing sets and their jungle gyms in their backyard and [Eden] would ask me, ‘Why do they get to play and I don’t?’”

During the early days of the pandemic there was an exodus of people with means out of densely packed cities and into more suburban or rural communities. That trend reversed as outdoor life resumed, but the experience seems to have impressed on people the importance of home and having space to live, work and grow.

Last year, millennials — people born between 1981 and 1996, ranging from 26 to 41 years of age — overtook Baby Boomers to become the largest generation in the United States. In 2019, Dane County’s median age was 35.5 years, which means there are a lot of millennials in the Greater Madison area.

And as an older millennial myself, I have spent more than a decade apartment-hopping as my generation and I recovered from the Great Recession amid rising healthcare costs and suppressed wages, all while saddled with student debt. Many of us are now ready to settle down, grow some roots, and become part of a community. But many of us are also priced out.

In December 2021, Hearst’s family was pre-approved again, but the timing couldn’t have been worse. In the intervening years, home prices had shot up. Even with the few homes she and her husband saw in their price range, their offer wasn’t competitive unless they could go $30,000, sometimes $50,000, over asking price and agree to waive the inspection — something she did not want to do.

“We have savings,” Hearst said in May. “We have pre-approval. We have the ability to pay a mortgage. But we’re trying to find a house in the worst time ever to try and buy a house in this town. I don’t know if that’s true, but it feels that way.

“And with our resources, we can’t seem to get ahead. What happens with people who have fewer resources?”

‘Invest in the people who are already here’

What happens is that a lot of Madisonians squeeze into units that are too small for their growing families and that they can barely afford.

According to the city’s 2020 housing affordability study, 54 percent of rental households are “cost burdened,” meaning that more than 30 percent of a family’s income goes toward housing. The majority of households with incomes under $35,000 are cost burdened, but due to the lack of housing, more families higher up on the socioeconomic ladder are also being squeezed. In 2020, 28 percent percent of homeowners and nearly 20 percent of renters with annual incomes of $50,000 to $75,000 spent more than 30 percent of their income on rent.

One factor driving up costs is the lack of housing units; for years, housing in Madison hasn’t kept up with its growing population. In 2015, the city estimated it needed a little more than 2,000 new units each year until 2020 to keep up with population growth. While construction in 2020 exceeded that estimate with 2,203 new units, the city was playing catch-up after falling short in 2018 and 2019, when only 1,583 and 1,682 units, respectively, were permitted.

Also, the city learned in 2020 that it had underestimated population growth by 12,000 people, so even more housing was needed than anticipated. The limited supply coupled with growing demand means Madisonians are paying more for less.

Camilla Jones, 32, and her partner, Roderick Morales, 33, both work but they spend more than half of their income on rent for a two-bedroom unit in an Eken Park house divided into apartments. They live there with their three children: 3-year-old Isaiah, 5-year-old Malachi, and 9-year-old Zuri.

“We’ve been there forever, but we have outgrown it,” Jones says.

Unless a program that provides affordable single-family homes, such as Habitat for Humanity or the Madison Area Community Land Trust, steps in, she doesn’t feel like homeownership is financially feasible for her family. They’ve looked at moving farther out of town, but that creates a whole set of logistical problems: The kids would have to change schools, and Jones and her partner both work in the city. What would they do if a vehicle broke down in a suburb with less reliable public transit?

Plus, Madison is her home. Jones was born and raised here. Her kids were born here and go to school here. Why should she have to leave?

“I love Madison. I want to stay in Madison,” Jones says. “And that’s who we should be investing in, not people who could be here. I think they’re building these huge extravagant places for people to move here, but we need to invest in the people that are already here.”

Those “huge, extravagant places” that Jones is referring to are often mixed-use apartment buildings that cater to more affluent college students or young workers with high-paying jobs. These projects account for much of the housing being built across the city.

“There’s been some affordable units built in Madison over the last 10 years, but the vast majority of the units have been market rate and targeted the upper end [of the market],” says Timothy Riddiough, chair of the Department of Real Estate and Urban Land Economics at UW-Madison. “You might think that if it’s students who are occupying that housing, that should take some pressure off some of the existing, lower-end stock of houses, but it doesn’t seem to have.”

Jones says her family tried living in large apartment complexes where they would have more space. But young children are noisy, and there were problems with neighbors and management. Their current landlord is understanding, but there’s the space issue, and the cost: their landlord is raising the rent $100.

“So we’re actively looking,” Jones says. “But if we can’t find anything, we’re willing to just keep squeezing in our tiny apartment.”

The quest for affordable housing

What kind of housing gets built, and where, is driven by economic incentives and municipal zoning regulations.

Madison has a number of public housing projects owned and managed by the City Development Authority and leased to low-income residents, including Truax Park Apartments, Tenney Park Apartments, Brittingham Apartments, Braxton Place and Romnes Apartments. But affordable housing projects built and managed by cities is a model municipalities have moved away from in recent decades.

Currently the majority of affordable units are incorporated into projects by private sector or nonprofit developers. Sometimes these are developments for low-income seniors, but typically the model is a mixed-income development that receives a mix of federal, state, or municipal funding and/or tax credits to set some units at lower price points for low-income residents.

Funding for this type of affordable housing, however, has “declined every year for the past, probably 30 years,” says Todd Mandel, executive director at Wisconsin Partnership for Housing Development.

“And the problem gets bigger.And it’s an expensive problem,” he adds. “This isn’t like people don’t have enough food, so we can all donate food and fix it. It costs a quarter of a million dollars to build a house. This isn’t like the community can put together a collection fund and bootstrap their way to affordable housing.”

The problem has only gotten more expensive since the Great Recession. Nationwide, the demand for housing plummeted after 2009, which put several construction companies out of business and forced their workers to enter new industries.

In Wisconsin, new housing numbers (as measured by new building, septic or other permits signaling a new housing project) were plummeting before the recession, as far back as 2006, according to data from the Wisconsin Builders Association. It increased gradually for a decade and then ramped up in 2020, but it still hasn’t fully recovered.

Like all other industries, construction companies are also facing a shortage of workers and construction materials. And, as Mandel points out, these costs affect all construction equally.

“When I’m trying to buy lumber to build a house, so is the guy who’s building the $500,000 McMansion,” Mandel says. “We’re still buying the same lumber. There’s no special, low-income housing lumber.”

Financially, developers are incentivized towards high-end, multi-unit buildings, because the zoning along major corridors makes it easier to get those projects approved. In its 2020 housing report, the city identified another avenue for creating density called the “missing middle” — this is housing, including “duplexes, triplexes, four-units, attached row houses, and cottage clusters,” that would be compatible in scale with most single-family residential areas and help meet growing demand.

But getting this type of housing approved in Madison’s single-family neighborhoods is a challenge.

Taking action

One project that drew particularly strong backlash was the redevelopment of the Zion Lutheran Church at 2165 Linden Ave., smack in the heart of Madison’s lively east side. When the project went before the city council, those who testified were mostly neighboring homeowners, who expressed concerns about traffic and project aesthetics.

Rebecca LeBeau was one of the few renters who testified, and one of the few who spoke in favor of the project. LeBeau and her wife have lived in the Schenk-Atwood-Starkweather-Yahara (SASY) neighborhood for five years. “I feel really lucky to live in such a vibrant and connected neighborhood,” she said in her testimony.

But she told council members that she and her wife were struggling to find a way to stay in the neighborhood. When they first moved into their two-bedroom, the rent was around $1,000 a month but now it’s a little over $1,500, “despite no material changes to the apartment.”

“This is an old building with no air conditioning and peeling paint in the windows and very little insulation with a $200 heating bill in the winter,” LeBeau said.

The cheapest single-family homes she could find in the area were priced at $350,000 — that would mean a $2,500 mortgage if the couple managed to save enough for a 20 percent down payment. Even with a dual income that is double Madison’s median household income (around $56,000, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau), a “very, very privileged position to be in,” LeBeau acknowledged, they were struggling to see how they could stay in the neighborhood they’d come to call home.

“How are most people in Madison supposed to survive this rental market, survive this home market, and who is actually going to be able to thrive in SASY if we don’t build more housing here?” LeBeau asked. “This is the reality: It’s just not affordable for most people to live in Madison, to live in SASY. And it’s only going to get worse, especially if we don’t build more housing.”

LeBeau is involved in an organization called Madison Is For People, founded by William Ochowicz.

“Like a lot of young millennials, I was looking at Zillow and the housing market and thinking there’s just no way I could afford to buy a house in this market,” Ochowicz says. “So I ended up doing some research online, just trying to figure out why is it that housing is so expensive, especially in places like Madison [and other] growing cities. Why is it so hard to find a home?”

Madison Is For People is a chapter of YIMBY Action, a nonprofit pro-housing organization based in San Francisco. YIMBY stands for “Yes In My BackYard,” as opposed to NIMBY or “Not In My BackYard,” referring to homeowners and businesses that oppose development projects, particularly those that promote density, affordability or diversity. YIMBY Action supports housing developments that “reduce poverty, end homelessness, eliminate racial segregation, create jobs, and stop climate change.”

When he founded Madison Is For People, Ochowicz was “looking for people who are sick of the ways that we currently build cities that make it expensive, make it so your affordable options are just farther and farther out from the city instead of where a lot of people really want to live, which is in the city.”

The group organizes renters to advocate for housing in their neighborhoods that fit the organization’s values: “economy, equity and environment.” This includes housing that supports workers and working families; protects woods and wetlands; promotes density; and bucks zoning, redlining, and other policies that have locked people out of the housing market.

“A lot of people want to live in the city. They’d be happy to give up a two-car garage or even their car to be able to walk around or bike around the city. But because housing in those neighborhoods is so expensive and we build so little of it, they don’t really have a choice,” says Ochowicz. “There are people who would like living in the suburbs and that’s good for them — they should have that choice. But there are a lot of people who are forced into that option.”

The city has taken steps to make middle housing projects more feasible in residential areas. In June, the city council eliminated the ability of residents to submit protest petitions that could shut down a project approved by the city’s Plan Commission unless a supermajority of council members vote to let the project move forward.

But that won’t necessarily curb the hostility many homeowners have toward multi-unit developments in their neighborhoods. And those are the voices usually most prominent during Plan Commission and city council meetings.

“Homeowners are trying to do what they think is best for their neighborhood and themselves, and in many ways, that means making sure that it doesn’t change,” Ochowicz says. But, he adds, there’s no one to advocate for the people who would live in a new apartment building or who are priced out of the housing market.

As he watches these conversations play out, Ochowicz says he hears a lot of fear of change related to traffic, density and property values. He’s trying to help reframe these conversations so they include the benefits.

“Homeowners only think about the negatives. They don’t think, ‘Well, this could be a place where my children could live when they grow up and want to stay in the city. This could be a place where the person who works in my favorite restaurant lives,’” Ochowicz says. “They don’t think about the people who would live there and the positives that they would bring to the neighborhood.”

And while a NIMBY is typically thought of as a “rich white homeowner,” Ochowicz says the attitude is “actually really common” among different races, classes and neighborhoods.

“People identify really strongly with their city and with their neighborhoods,” Ochowicz says. “But that doesn’t mean that that fear should be what dominates the conversation.”

Moving forward

After years of delays and frustration, Hearst and her family in August closed on a split-level house on Madison’s north side, near Warner Park. Even with the end in sight, they had qualms because the Federal Reserve raised interest rates in order to combat inflation.

“The interest rate was and is a big worry, especially because when our offer was accepted on the house, the interest rate went up a percentage point that week!” Hearst says. “And we really struggled with whether to lock in the rates or whether to wait or what our options were because it’s so significant of a difference.”

In the end they decided to move forward: “We have [been] looking for so long and just couldn’t stay in our current situation for much longer.”

Jones recently learned that her landlord is selling the property where she and her family live. She’s on the lookout for more affordable options, but is waiting to hear what their options might be with the new owner.

It’s a lot for someone raising three kids, working, and going to school full time to become an elementary school teacher.

“I am desperately trying to lift our family out of poverty but it can be so hard when you are hit at every angle,” says Jones. “I think there is this attitude that you need to lift yourself up by your own bootstraps. In reality we could all use a little help, especially since no one got here on their own.

“With that being said, we are extremely grateful to have a roof over our heads and food in our belly,” Jones continues. “It would also be nice to have housing affordability, because we deserve it.”