Renting
Measuring rents
Researchers know considerably less about the rental market than home values. This is because the government routinely collects and publishes information about property values. The results of every property sale are publicly available, and applying that sales data to appraise the value of other homes is the focus of a large, data-driven industry.
In contrast, no central repository of rents exists. The government collects some data on rents through surveys of tenants, but this data comes with sampling error that grows at smaller geographies. In any case, the government data is often released years after collection.
Various private companies have stepped into the gap of gathering price data. This data can be valuable. One company, RealPage, was just sued for price fixing by the Department of Justice.
Of the private companies publishing aggregate rent data, Zillow is the source whose data and methodology I trust most. Zillow identifies units which are listed for rent repeatedly over time, then uses those within-unit rent changes to measure overall changes to the local rental market. They then weight their data to the actual inventory of rental units in a given geography.
Rents have grown more slowly than home prices
Rent growth since the pandemic has been much lower than growth in home prices.
In the City of Milwaukee, average home prices grew by $80,100 (+64%) between 2019 and 2024. The monthly cost needed to buy that home grew by $853 (+83%). Meanwhile, the average monthly rent grew by $316 (31%).
In Milwaukee County as a whole, average home prices grew by $94,600 (+55%) between 2019 and 2024. The monthly cost needed to buy that home grew by $1,034 (+76%). Meanwhile, the average monthly rent grew by $329 (31%).
In Waukesha County, average home prices grew by $131,200 (+41%) between 2019 and 2024. The monthly cost needed to buy that home grew by $1,520 (+68%). Meanwhile, the average monthly rent grew by $392 (+30%).
The BLS won’t publish detailed Milwaukee metro wage data for 2024 until next year. But from 2019 to 2023, the average monthly wage of a full time worker in the metro grew by $645 (+19%). The monthly wage of the 25th percentile worker grew by $731 (+32%). For the 10th percentile worker, monthly wages grew by $629 (+36%).
For those workers most likely to be renting (those in the bottom half of the income distribution), wage gains during the early 2020s were real, but they fell far short of the rapid growth in home prices. However, they more closely tracked the growth in rents. In 2019, the average City of Milwaukee rent was 30% of the median full time worker’s wage. In 2023, the typical rent was 31% of the median worker’s wage. (Assuming Milwaukee experienced the same 4% wage growth as the rest of the nation between May 2023 and May 2024, the typical rent was still 31% of the median worker’s wage in 2024.)
To put it simply, the monthly payment needed to buy the average City of Milwaukee home was 30% of the metro’s median full time wage in 2019. That’s assuming a 5% down payment and 1% PMI. At the same time, the monthly rent on the city’s average apartment was also 30% of the median wage. In 2023, the average rent had ticked up to 31% of the median wage. However, the PITI needed to buy the median house was now 41% of that average wage.
In Waukesha County, the monthly payment needed to buy the average home was 66% of the metro’s median full time wage in 2019, and it rose to 80% in 2023. Meanwhile, the average rent was 38% of the metro’s median wage in 2019 and still 38% in 2023.
| Average housing costs in the Milwaukee metro | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Median home price, monthly cost of buying the median home, and typical rents | |||||||||||||||
| place | home value | PITI1 | rent | ||||||||||||
| 2019 | 2023 | 2024 | change2 | pchg | 2019 | 2023 | 2024 | change2 | pchg | 2019 | 2023 | 2024 | change2 | pchg | |
| City of Milwaukee | $126K | $188K | $206K | $80.1K | 64% | $1,023 | $1,669 | $1,877 | $853 | 83% | $1,006 | $1,241 | $1,322 | $316 | 31% |
| Milwaukee County | $171K | $245K | $266K | $94.6K | 55% | $1,352 | $2,139 | $2,386 | $1,034 | 76% | $1,054 | $1,304 | $1,383 | $329 | 31% |
| Waukesha County | $324K | $427K | $455K | $131.2K | 41% | $2,225 | $3,371 | $3,745 | $1,520 | 68% | $1,294 | $1,615 | $1,686 | $392 | 30% |
| Washington County | $277K | $369K | $392K | $115.0K | 42% | $1,906 | $2,919 | $3,235 | $1,330 | 70% | — | $1,071 | $1,118 | — | — |
| Ozaukee County | $335K | $438K | $452K | $116.3K | 35% | $2,319 | $3,505 | $3,780 | $1,460 | 63% | — | $1,259 | $1,396 | — | — |
| 1 Principal, interest, taxes, & insurance. Assumes 5% down payment, prevailing interest rates, 1% PMI, gross tax rates, and WI median home insurance premiums | |||||||||||||||
| 2 Change from May of 2019 to May of 2024 | |||||||||||||||
Renting vs. buying
Because the price of homebuying has increased so much faster than the price of rent, the benefit calculus for buying vs. renting has shifted. Prices in the City of Milwaukee illustrate this most strikingly.
From 2015-2017, the average rent in Milwaukee was more expensive than the principal, interest, taxes, and insurance required to buy the median home, even with an entry-level down payment of 5% and 1% PMI. Then, from mid-2018 to the autumn of 2020, average rent and PITI were about the same. Since then, PITI has been far more expensive than rent.
Here are some specific numbers: * in May of 2016, the average rent was $943 and PITI for the median home was $779. * in May 2017, PITI on the median home was $92 less than the average rent * in May 2019, the median PITI and the typical rent were both about $1,005. * in May 2021, the median PITI was $1,204 and the median rent was $1,084. * by May 2024, the median PITI was $550 more expensive than the typical rent.
The relationship in the graph above is particularly striking because the median home price covers actual houses while the typical rent includes small apartment units. If you were determined to live in a house (not an apartment), buying it outright was by far the better option than renting it for most people in the late 2010s.
In 2020, we collected market rate rental estimates for over 1,100 randomly selected single family homes in the City of Milwaukee. We estimated the monthly cost of owning these homes, assuming PITI, “city utilities at $200 per quarter, and monthly maintenance expenses calculated as 17.5% of the housing unit’s total rent.” We wrote, “Our analysis found a dramatic difference between ownership and rental costs. We estimate that the average renter of a $75,000 single-family home pays about $227 more a month than it would cost to own the property. And the average renter of a $50,000 home pays $360 more per month than it would cost an owner with normal expenses.”
For this analysis, I obtained 2024 market-rate rent estimates for each of those homes. In 2020, 68% of houses would’ve been cheaper to buy than rent, based on our standard cost assumptions. Now, in 2024, only 42% would be cheaper to buy than rent.
The City of Milwaukee has long been unusually affordable both among U.S. cities generally and Milwaukee metro municipalicities specifically. While it is still cheaper, the cost/benefit of owning versus renting has changed. Now, even among single family homes, it is now generally cheaper to rent a house than to buy it.
Milwaukee’s rent trends vs elsewhere
Claims that Milwaukee’s rents have risen unusually fast don’t bear out on closer examination. Nationally, the typical rent for any kind of unit grew by $536 (+35%) from May 2019 to May 2024. In the Milwaukee metro as a whole, they grew by $327 (+31%). In Milwaukee city specifically, they grew $316 (+31%). In Waukesha County, they grew $392 (+30%).
Rent increases were a bit steeper in Milwaukee than the nation during just the past year. From May 2023 to May 2024, the national typical rent grew by $69 (+3.5%). In the Milwaukee metro, they grew by $75 (+5.7%). In Milwaukee city they grew $81 (+6.5%), and in Waukesha County the grew $70 (+4.4%).
Among the nation’s largest 100 metro areas, the Milwaukee metro’s percentage rent growth ranks 12th highest for the year ending May 2024. However, taking the longer view, it ranks only 75th highest from growth since 2019. Likewise, the City of Milwaukee ranks 5th highest among the largest 100 American cities in percentage rent growth from May 2023 to May 2024, but 65th for the longer period beginning in May 2019.
Here’s another, possibly clearer, way of putting it. In 2019, the City of Milwaukee had the 14th cheapest average rent among the largest 100 cities in the United States. In 2024, it ranked 8th cheapest.
In 2019, the Milwaukee metro had the 21st cheapest rents among the largest 100 metros (Wichita was the cheapest and San Jose the most expensive). In 2024, the Milwaukee metro was the 13th cheapest.
Even rents in more expensive Waukesha county became more affordable, relative to the rest of the country. Out of the 200 largest counties in the country, Waukesha’s average rents were the 73rd cheapest in 2019 and the 62nd cheapest in 2024.