Cost Of Living
Cost of Living
By Jennifer Garrett for Madison Magazine
Marilee Karamanski was sick of renting. She was tired of lining her landlord's pocket. So, she bought her own house. What she could afford as a single woman with one salary was a small starter home in an Isthmus neighborhood peppered with a few student rentals. Nothing fancy. She paid $100,000 for the 1,000-square-foot, three-bedroom house.
That was six years ago. Now her humble home is a little less modest, worth $150,000. "I figured if I lived in a house for so many years and still got my down payment out of it, I'd be fine," Karamanski says. "I had it assessed and it's gone up 50 percent from when I bought it. That's pretty shockingly good for six years. I knew it would go up in value, but I didn't expect that."
Karamanski is not alone. Homeowners all over town have benefited from runaway appreciation. Last year home values in Tenney Park, Williamson-Marquette and Nakoma jumped more than 14 percent. Warner Park topped 11 percent, while Vilas and Westmoreland values increased over 10 percent.
Not all neighborhoods are appreciating as quickly, but overall property values in Madison grew 8.5 percent. Now the average city assessment is $189,500. The average sale price of a home was $205,231 last year, up from $189,459, according to the Southwest Wisconsin Multiple Listing Service. "Everything has gone up," says Ron Restaino of Restaino Bunbury Realtors. "There are pockets that have gone up more than others, but there is really no place to hide."
Low interest rates have would-be homeowners crawling out of the woodwork. They are flooding the market, primarily at the low end. All the competition increases demand and prices have nowhere to go but through the roof. It can be a heady time for folks like Karamanski, who are sitting on small fortunes. But it's not all good news. Karamanski is ready to move. Now married and with a baby on the way, she needs more space for her growing family. Even though the market rewarded her with appreciation on the home she already owns, it is testing her as she tries to buy again. Already Karamanski got caught up in a bidding war for a home in the Midvale neighborhood, but she lost the house.
"We actually offered $5,200 over the asking price on the day it came on the market and we didn't get the house," she says. "Somebody offered more. I wasn't entirely surprised."
Paul Raisleger experienced the same phenomenon but from the seller's end of the market. He sold his small 67-year-old Midvale ranch on the West Side in just one day.
"I was not too surprised that it sold so fast," Raisleger says. "We priced it a little above the mean price for the square footage and amenities ... In hindsight we could have probably asked five or six thousand more when we saw this year's assessments."
Restaino, too, has seen it happen. He listed a modest starter home in the North Side Brentwood area for $134,900. He says he priced it aggressively higher than comparable listings in the neighborhood. Still, the sellers received three bids the first day, and the lowest was the asking price.
"I was flabbergasted and almost looked foolish to the seller," Restaino marvels. "Even the realtors shake their heads at what people are willing to pay."
While the pressure is greatest for first-time buyers who face the most competition, many desirable neighborhoods are seeing all houses move quickly. "If a house is in a really popular neighborhood and is appropriately priced, you can sell it in a day," says Paula Gorham, a housing counselor with the Dane County Housing Authority.
"In Vilas you've got to really be aggressive at any price," says Kathy Canary, a real estate agent with First Weber. She says even houses priced over $300,000 are snatched up in a matter of days. And what do you get for $300,000? It definitely depends on the neighborhood.
"When you're talking about areas like Nakoma, University Heights and Shorewood, you can barely buy anything for $300,000," Restaino says. In Nakoma, Restaino expects $300,000 to buy about 1,500 square feet, one and a half baths and a one-car garage. "For $350,000 maybe you'll get a remodeled kitchen. If you want a two-car garage and two and a half baths, you're probably going to have to be at about $400,000 if you want a house in good condition."
Leigh Mollenhoff, another First Weber agent, agrees. "For 300,000 in Shorewood you get a really small house without a lot of features, but there is a market willing to pay for it."
For the same amount in Fitchburg you can find a brand-new house with four bedrooms, a three-car garage and two and a half baths in 2,400 square feet. You lose the proximity to downtown events, but you gain space. You give up some of the charm and character of a more established neighborhood, but you also forego the maintenance of an older home.
Raisleger traded a popular neighborhood with a good location for more space, but it was a difficult decision. "We really loved the Midvale area and we were sad to go," he says. But to get enough space for his family, he had to leave his neighborhood. Raisleger estimates that the house he bought in Middleton would have cost up to $50,000 more in Midvale, and he wasn't willing to pay that price.
"If you want more house, you live in some of the outlying areas. If you want location, you pay the premium to be closer to downtown Madison," he says. "That is the choice people make."
No matter what your choice, it feels like an expensive one these days. And even though Madison boasts miles of bike paths, beautiful lakes, a growing arts community and great schools, homeowners like Karamanski are not certain that they really get what they pay for.
"Heck if I know," she says. "I think it's all crazy. But it's also silly to rent if you can afford to own. Why build someone else's equity?"
Especially in a market like Madison.
By Jennifer Garrett for Madison Magazine
Marilee Karamanski was sick of renting. She was tired of lining her landlord's pocket. So, she bought her own house. What she could afford as a single woman with one salary was a small starter home in an Isthmus neighborhood peppered with a few student rentals. Nothing fancy. She paid $100,000 for the 1,000-square-foot, three-bedroom house. That was six years ago. Now her humble home is a little less modest, worth $150,000. "I figured if I lived in a house for so many years and still got my down payment out of it, I'd be fine," Karamanski says. "I had it assessed and it's gone up 50 percent from when I bought it. That's pretty shockingly good for six years. I knew it would go up in value, but I didn't expect that."
Karamanski is not alone. Homeowners all over town have benefited from runaway appreciation. Last year home values in Tenney Park, Williamson-Marquette and Nakoma jumped more than 14 percent. Warner Park topped 11 percent, while Vilas and Westmoreland values increased over 10 percent.
Not all neighborhoods are appreciating as quickly, but overall property values in Madison grew 8.5 percent. Now the average city assessment is $189,500. The average sale price of a home was $205,231 last year, up from $189,459, according to the Southwest Wisconsin Multiple Listing Service. "Everything has gone up," says Ron Restaino of Restaino Bunbury Realtors. "There are pockets that have gone up more than others, but there is really no place to hide."
Low interest rates have would-be homeowners crawling out of the woodwork. They are flooding the market, primarily at the low end. All the competition increases demand and prices have nowhere to go but through the roof. It can be a heady time for folks like Karamanski, who are sitting on small fortunes. But it's not all good news. Karamanski is ready to move. Now married and with a baby on the way, she needs more space for her growing family. Even though the market rewarded her with appreciation on the home she already owns, it is testing her as she tries to buy again. Already Karamanski got caught up in a bidding war for a home in the Midvale neighborhood, but she lost the house.
"We actually offered $5,200 over the asking price on the day it came on the market and we didn't get the house," she says. "Somebody offered more. I wasn't entirely surprised."
Paul Raisleger experienced the same phenomenon but from the seller's end of the market. He sold his small 67-year-old Midvale ranch on the West Side in just one day.
"I was not too surprised that it sold so fast," Raisleger says. "We priced it a little above the mean price for the square footage and amenities ... In hindsight we could have probably asked five or six thousand more when we saw this year's assessments."
Restaino, too, has seen it happen. He listed a modest starter home in the North Side Brentwood area for $134,900. He says he priced it aggressively higher than comparable listings in the neighborhood. Still, the sellers received three bids the first day, and the lowest was the asking price.
"I was flabbergasted and almost looked foolish to the seller," Restaino marvels. "Even the realtors shake their heads at what people are willing to pay."
While the pressure is greatest for first-time buyers who face the most competition, many desirable neighborhoods are seeing all houses move quickly. "If a house is in a really popular neighborhood and is appropriately priced, you can sell it in a day," says Paula Gorham, a housing counselor with the Dane County Housing Authority.
"In Vilas you've got to really be aggressive at any price," says Kathy Canary, a real estate agent with First Weber. She says even houses priced over $300,000 are snatched up in a matter of days. And what do you get for $300,000? It definitely depends on the neighborhood.
"When you're talking about areas like Nakoma, University Heights and Shorewood, you can barely buy anything for $300,000," Restaino says. In Nakoma, Restaino expects $300,000 to buy about 1,500 square feet, one and a half baths and a one-car garage. "For $350,000 maybe you'll get a remodeled kitchen. If you want a two-car garage and two and a half baths, you're probably going to have to be at about $400,000 if you want a house in good condition."
Leigh Mollenhoff, another First Weber agent, agrees. "For 300,000 in Shorewood you get a really small house without a lot of features, but there is a market willing to pay for it."
For the same amount in Fitchburg you can find a brand-new house with four bedrooms, a three-car garage and two and a half baths in 2,400 square feet. You lose the proximity to downtown events, but you gain space. You give up some of the charm and character of a more established neighborhood, but you also forego the maintenance of an older home.
Raisleger traded a popular neighborhood with a good location for more space, but it was a difficult decision. "We really loved the Midvale area and we were sad to go," he says. But to get enough space for his family, he had to leave his neighborhood. Raisleger estimates that the house he bought in Middleton would have cost up to $50,000 more in Midvale, and he wasn't willing to pay that price.
"If you want more house, you live in some of the outlying areas. If you want location, you pay the premium to be closer to downtown Madison," he says. "That is the choice people make."
No matter what your choice, it feels like an expensive one these days. And even though Madison boasts miles of bike paths, beautiful lakes, a growing arts community and great schools, homeowners like Karamanski are not certain that they really get what they pay for.
"Heck if I know," she says. "I think it's all crazy. But it's also silly to rent if you can afford to own. Why build someone else's equity?"
Especially in a market like Madison.
