For the first time, the total value of property in Madison and Dane County is estimated to be worth more than its counterpart in Milwaukee and Milwaukee County.
Based on 2018 preliminary state Department of Revenue figures, Madison has an equalized property value of $28.7 billion compared to Milwaukee’s equalized value of $28.3 billion, according to a report from the nonpartisan Wisconsin Policy Forum.
The preliminary figures show 2018 equalized property values of Dane and Milwaukee counties at $65.0 billion and $64.1 billion, respectively, the report said.
“Milwaukee has always been Wisconsin’s first-class city, and it remains that, but Madison and Dane County have made considerable strides over the past generation in catching up with Milwaukee,” said Jason Stein, research director at Wisconsin Policy Forum. “These property tax numbers show how far they’ve come, how far they’ve moved in that direction.”
“This is very encouraging news,” Mayor Paul Soglin said in a statement Thursday. “The city of Madison continues to show sustained growth and a healthy economy in all neighborhoods.”
In an interview with the Wisconsin State Journal, Soglin said increasing the tax base has been a priority of his since returning to the mayor’s office in 2011.
“I knew if we were going to support all the social services required to fix the city that we had to grow the tax base,” he said. “That’s been a continuing day-to-day priority in everything we do.”
Soglin said he recognizes the burden that appreciation on the value of existing houses can create for homeowners, and said that continued investment in the housing stock is necessary to allow people of all economic levels to live in Madison.
“As we get new construction, it means that we’re spreading that burden across a larger base,” he said of property taxes. “It means that we’re taking otherwise less productive real estate and turning it into meaningful housing, retail and commercial space.”
Last year, Soglin said projections showed Madison and Milwaukee could be equal in property tax value by 2020.
“We didn’t expect it to happen this soon,” he said.
Madison and other municipalities assess the value of taxable properties to establish a tax base, which is used to set a tax rate for tax collections.
The state, meanwhile, calculates the collective worth of municipalities and counties, known as equalized property value, largely to determine taxes for cross-jurisdictional services such as technical colleges and school districts.
While property values may broadly allude to the economic growth of an area, Stein said the Milwaukee area still remains the economic powerhouse of Wisconsin.
The 2016 gross domestic product of the Milwaukee area was more than double that of the Madison area, according to data from the federal Bureau of Economic Analysis. Milwaukee County has 459,000 jobs versus 315,000 in Dane County, the report said.
Not ‘Madison over Milwaukee’
Zach Brandon, president of the Greater Madison Chamber of Commerce, said that a positive story for Madison doesn’t equate to a negative one for Milwaukee, but that Madison’s increasing property value demonstrates there is room for two large economic centers in Wisconsin.
“There’s a positive story for all of Wisconsin that says you have two very different economic engines,” he said. “This isn’t a story of Madison over Milwaukee. This is a story about Madison and Milwaukee.”
Several factors contribute to the rise of the Madison property value, such as the effect of the Great Recession and the availability of land for growth and development, Stein said.
Madison and Dane County have been closing the gap on property values compared to Milwaukee and Milwaukee County for decades, Stein said.
But a less severe impact on property values during the Great Recession and a quicker and stronger rebound for the capital city area has accelerated the gains on Milwaukee, he said.
Madison’s equalized property value has risen 32.4 percent since 2012, which represents a 24.2 percent increase from its pre-recession peak, according to the report.
For Milwaukee, the city’s preliminary property value remains 12 percent below its pre-recession peak in 2008, the report said.
Stein also noted that Madison is able to annex surrounding property, and there is an abundance of open land for development in Dane County as opposed to the urbanized Milwaukee County.
A growing number of residents in Dane County also “can boost the property prices,” the report said.
Between 1988 and 2017, the population of Madison increased by 40.7 percent and Dane County by 51.4 percent, according to the report. Milwaukee lost 1.8 percent of its population, and Milwaukee County grew only 1.5 percent during that time period.
The estimated 2017 populations are: Madison, 255,214; Dane County, 536,416; Milwaukee, 595,351; and Milwaukee County, 952,085.
The Department of Revenue will publish its finalized 2018 equalized property values on Wednesday. Stein said the finalized numbers won’t change the long-term trend of Madison and Dane County’s increasing property values.
Kevin King, the executive vice president of the Realtors Association of South Central Wisconsin, shared similar sentiments that an increasing population, available agricultural land for building and a growing economy have benefited the real estate market in Madison.
But he said there is no question the Dane County housing market is being affected by appreciation, largely due to a relatively low supply compared to the demand.
From July 1, 2016, to June 30, 2017, the median value of single-family homes and condos sold in Dane County was $262,000, King said. The median value has increased to $278,000 between July 1, 2017, and June 30 of this year, he said.