Multifamily Real Estate Trends:

December, 2018

The report below covers the latest trends for income properties in Madison and Dane County, Wisconsin. Our report covers gross rent multiplier, price, sales, inventory, days on market, and other trends in the multifamily real estate market. All data comes from the South Central Wisconsin MLS database. Below is a snapshot for our December, 2018 report.

View all listed Madison area income properties for sale here.

Dane County Multifamily Real Estate Overview

  • The Madison area gross rent multiplier through December is near historic highs. 
  • The multifamily average price per unit reached a new high in 2018. 
  • Only 1.7 months of income property supply are available for sale on the MLS. as of January 23rd, 2019. This low level of supply is helping to push local GRMs and local prices higher. 
  • Multifamily sales have plateaued in recent years due to low inventory. Sales through October are down 6% from last year. 
  • Expired listings are trending along record lows through the month of October.  
  • The rental property listing expiration rate is also historically low - an indication of a great market for sellers. 
  • New multifamily listings continue to enter the market at a slow pace. 
  • Days on market for investment properties are trending along historically low levels - an indication of a good market for sellers.

Dane County Gross Rent Multiplier - December, 2018

The gross rent multiplier (GRM) measures a rental property's sales price relative to its income producing potential (sales price/gross annual income). A market with low GRMs indicates an environment where investors can purchase at good values. A market with rising GRMs indicates one where properties are becoming more expensive. 

Madison area gross rent multipliers have been trending higher after bottoming out in 2012. The average GRM through the month of December was 9.5, an historically high number. Low supply and high demand have been pushing local prices and local GRMs higher. 

On an annual basis, the Dane County GRM ended the 2018 year at 9.5.   

Multifamily Average Price per Unit - December, 2018

The Dane County income property price per unit has been trending higher. Year-to-date through December, the average price per multifamily unit is $121,942 - the highest on record.  

 

On an annual basis, the multifamily price per unit ended the 2018 sales year at $121,942 - the highest ever.

Dane County Multifamily Inventory - January, 2019

The table below is a snapshot of the local rental property market taken on January 23rd. Overall, there are only 1.7 months of supply available for sale in the Dane County multifamily real east market. Also, 37% of all Madison area multifamily listings have an accepted offer. These stats indicate a high demand/low supply market. 

Dane County Multifamily Sales - October, 2018

So far this year, investment properties are selling slightly below the pace from last year. Year-to-date through October, a total of 241 Dane County multifamily listings sold via the South Central Wisconsin MLS. Note, sales would be higher if more inventory were available on the open market. Right now there is a large, pent up demand for multifamily real estate in the Madison area. 

On an annual basis, a total of 298 multifamily listings sold via the MLS in 2017. This was the highest annual total since 2005, when 327 listings sold. 

Dane County Expired Multifamily Listings - October, 2018

A total of 48 Dane County income property listings expired year-to-date through the month of October. This represents the lowest expired listing total on record. This is one of many indicators which point to a strong seller's market for investment properties in the Madison area. 

A total of 55 rental property listings expired in 2017 - the lowest expired listing total on record.

Income Property Expiration Rate - October, 2018

The year-to-date expiration rate for Madison area multifamily listings is only 17%. This represents the second lowest year-to-date expiration rate on record. In contrast, the 2008 expiration rate was 80%.  

The annual income property listing expiration rate in 2017 was only 16%. This was the lowest expiration rate on record. 

New Dane County Income Property Listings - October, 2018

Year-to-date, a total of 324 multifamily listings were posted to the MLS through the month of October. A low supply of fresh incoming listings has helped to shape a seller's market for multifamily properties in the Madison area. 

A total of 341 income property listings were posted to the MLS in 2017. This was a near record low for the Dane County market. 

Dane County Multifamily Days on Market - October, 2018

Year-to-date through October, the average days on market for Madison area rental properties is only 26 days - the lowest average on record. 

The annual average days on market for all of 2017 was only 40 days - which was the second lowest annual average dating back to the year 2000. 

About the Author

Dan Miller is a licensed real estate salesperson with RE/MAX Preferred in Madison, Wisconsin. Contact Dan with any questions you have about buying, selling or investing in the Dane County area. This market report will be updated several times throughout the year. Check back often for an update on the latest trends in the local investment property market. 

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