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Madison, Illinois: Resilient Homeownership Amid Population Decline
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
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Property Value
Percent Owner Occupied
Housing Prices
Median Rent
Population
Madison, Illinois: A Decade of Housing Market Changes Madison, Illinois, a small urban area in the southwestern part of the state, has experienced significant changes in its housing market over the past decade. These changes include fluctuations in homeownership rates, average home prices, and average rent prices, with an overall trend showing a slight increase in homeownership and rising average home prices. The city's housing market dynamics have been influenced by various factors, including changes in population and federal interest rates.
Homeownership and Home Prices The homeownership rate in Madison has shown a modest increase over the years. In 2013, the homeownership rate was 60%, which decreased to 53% in 2018, but rebounded to 60% by 2022. This trend aligns with changes in average home prices. The average home price in 2013 was $22,688, which rose to $29,442 in 2018, and further increased to $41,198 in 2022. This represents an impressive 81.6% increase in average home prices over a nine-year period.
Interest Rates and Homeownership The relationship between federal interest rates and homeownership rates in Madison shows interesting patterns. In 2013, when the federal interest rate was 0.11%, the homeownership rate was 60%. As interest rates remained low, hovering around 0.1% to 0.4% from 2014 to 2016, homeownership rates decreased slightly. However, as interest rates began to rise more significantly from 2017 (1%) to 2019 (2.16%), homeownership rates stabilized around 54-55%. Interestingly, when interest rates dropped again in 2020 and 2021 (0.38% and 0.08% respectively), homeownership rates started to increase, reaching 60% by 2022 despite a higher interest rate of 1.68% that year.
Rental Market Trends Renter percentages and average rent prices in Madison have also shown notable trends. In 2013, 40% of the population were renters, with an average rent of $799. The percentage of renters increased to 47% by 2018, with average rent rising to $820. However, by 2022, the renter percentage had decreased back to 40%, while the average rent slightly decreased to $777. It's worth noting that during this period, the city's population decreased from 6,117 in 2013 to 4,593 in 2022, which may have influenced these housing market dynamics.
Recent Data and Future Projections Looking at the most recent data, the average home price in Madison continued to rise, reaching $42,160 in 2023 and $46,412 in 2024. This represents an 11.3% increase from 2022 to 2024. Concurrently, federal interest rates have also increased significantly, rising to 5.02% in 2023 and 5.33% in 2024. These higher interest rates could potentially impact future homeownership rates and home prices.
Applying predictive models to forecast 5-year trends, we anticipate that average home prices in Madison will continue to rise, potentially reaching around $55,000 by 2029. This projection is based on the consistent upward trend observed over the past decade. For average rent prices, the forecast suggests a more moderate increase, potentially reaching approximately $850 by 2029, assuming the city's population stabilizes or begins to grow again.
Conclusion Madison has experienced a notable increase in homeownership rates and average home prices over the past decade, despite fluctuations in federal interest rates. The rental market has shown more variability, with changes in both renter percentages and average rent prices. The city's declining population has likely played a role in these housing market dynamics. Moving forward, the housing market in Madison appears poised for continued growth in home values, with more modest increases expected in the rental market.
