Despite lots of construction, Milwaukee still needs more 1-bedroom apartments

New apartment construction in American cities tends toward large buildings with small units, leaving fewer new options for households with more than 2 members.

Complaints abound about the lack of apartments suitable for a family with kids. In Milwaukee, I often hear questions like, “Who is going to live in these?” and “Where will families go?”

The truth is, even the robust growth of studio and 1-bedroom apartments has failed to meet the even more rapid rise in the number of these households. Over the past decade, the city of Milwaukee added around 9,300 1-person households versus about 2,200 new studio or 1-bedroom housing units.

Surely, not all these 1-person households will want to live in a small unit, but judging by current dwelling behavior, many clearly do. The growing gap between potential residents of small units and available inventory is larger than that for any other market segment.

Bigger buildings, smaller units

The next two graphs show annual construction statistics for the Midwest. In 2022, 63% of new apartment units came from buildings of at least 50 units, compared to just 21% in 2005. Apartment buildings with 2-4 units are hardly built anymore. They contributed just 1% of new apartments last year, down from 11% in 2005. Likewise, small apartment buildings with 5 to 9 units contributed 22% of new units in 2005 and just 4% in 2022.

bar plot showing the annual share of multifamily units completed by number of units per building in the midwest region

As apartment buildings have grown larger, units have grown smaller by every measure. Seventy-eight percent of apartments built in 2005 contained at least 2 bedrooms, falling to 50% in 2022.

From 2000-2009, studio apartments made up about 1.5% of annual apartment construction. During the first three years of the 2020s, studios comprised 12.3% of new construction.

In 2005, 28% of new apartments were under 1,000 sq. ft. and 10% were 1,800 sq. ft. or larger. In 2022, 51% of new units were under 1,000 sq. ft. and just 2% were at least 1,800 sq. ft.

bar plot showing the annual share of newly-built apartment units by number of bedrooms in the midwest region

Growing demand for small units

Often, reasons for this dearth of “family-sized” apartments are given from the supply side. Zoning codes often make it hard to build the kinds of small apartment buildings that would fit in residential neighborhoods. Where room allows, bigger buildings are both more profitable. U.S. fire codes require large apartment buildings to be built around a central hallway. These “double-loaded” floor plans limit the number of multi-bedroom apartment units common elsewhere.

In cities like Milwaukee, there is also tremendous demand for small apartment units.

Even as Milwaukee’s population has fallen over the past 50 years, the number of households (or occupied housing units), has remained stable due to the growing number of people living by themselves.

Just over the past decade, the city added 9,300 1-person households and 1,500 2-person households, while losing 11,500 households with 3 or more members.

bar plot showing the number of households by household size in the city of Milwaukee over time

Milwaukee’s housing stock has, overall, not caught up to these changes.

Recent census estimates count about 87,000 single-member households in Milwaukee, compared with an available supply of 52,000 studio or 1-bedroom apartments.

In sharp contrast, Milwaukee holds 23,000 more 2-unit dwellings than 2-person households and 53,000 more 3-unit dwellings than 3-person households. Four-person households are closely matched to the number of 4-bedroom homes, and the number of households with 5 or more members (though shrinking) still outstrips the number of 5+ bedroom houses by about 16,000.

bar plot comparing households by size with housing units have the same number of bedrooms

Of course, households do not match house sizes in the neat way those numbers suggest. Children in large families have always shared bedrooms and small households sometimes want more space. As I began writing this piece, I wondered if the relationship might run in reverse. Perhaps parents have less money to spend, and so wind up in smaller houses, while couples without children might be able to afford the largest houses.

As it turns out, this is not the case. Within the constraints of Milwaukee’s housing supply, people generally wind up choosing homes that closely match their household size.

The most common situation, involving 37% of households, is when the number of bedrooms exactly matches the number of residents. Another quarter of households have one extra bedroom. Fourteen percent have two extra bedrooms, and another 14% have 1 more person than they do bedrooms. Only 9% of households have at least two fewer bedrooms than people.

Forty percent of 1-person households live in either a studio or a 1-bedroom apartment. Another third live in a two-bedroom unit. The modal 2-person household lives in a 2-bedroom unit (41%), and just over half of 3-person households also live in a 3-bedroom home.

More of a mismatch exists for larger families, those with 4 or more members. Half of 4-member households live in a 3-bedroom house, a quarter have 4 or more bedrooms, and another quarter live somewhere with fewer than three.

Among households with 5 or more people, just 9% live in a house with 5 or more bedrooms, reflecting the lack of supply in this category. Large families are still the most likely group to live in one of these uncommonly large houses.

table showing the proportions of households (by size) living with different numbers of bedrooms

In a city like Milwaukee, with little available land for new construction, it comes as no surprise that most new construction is tailored to the only market segment with significant growth—adults without kids, usually living alone. Three-bedroom units abound, albeit primarily in aging housing stock.

The big challenge for builders and policymakers will be figuring out how to build enough smaller units that are appealing and affordable to the growing numbers single-member households. The large apartment buildings that dominate the current construction landscape are an important part of that. Milwaukee also needs to advance strategies like accessory dwelling units and corner quadplexes that accommodate shrinking household sizes in popular, already built-out residential neighborhoods.

Data Note

The Census Bureau does not publish a table counting households by members and bedrooms, so I computed this data from the most recent batch of census microdata. Due to limitations with the dataset, these statistics include Milwaukee County’s north shore suburbs.

Additional statistics are drawn from the 2017-21 American Community Survey, the 2008-12 ACS, decennial censuses from previous years, and the Survey on Construction.

Continue ReadingDespite lots of construction, Milwaukee still needs more 1-bedroom apartments

Milwaukee home sales volume follows to lowest in years, prices are trailing inflation

The number of houses sold in Milwaukee fell by 32% during the second quarter of 2023, compared to the same period last year. While prices continued to rise, they did so more slowly than the inflation rate.

In “real,” inflation-adjusted dollars, the median sale price was about $10,000 below the peak in 2021, albeit still well above pre-pandemic prices.

My analysis of preliminary state transaction records shows about 1,950 “arm’s length” home sales during April, May, and June of 2023. That is roughly 900 fewer than either of the past two years and close to the total sold in the second quarter of 2020, when much of the economy was still frozen by the COVID-19 pandemic.

In my last housing market report, I described first quarter home sales as falling to “pre-pandemic levels.” Now, it’s fair to say that the housing market is even cooler than that. Sales were down about 6% through the first three months of 2023 compared to 2019. That downward trend has continued, and sales in the 2nd quarter of 2023 were fully 18% lower than in 2019.

bar plot showing quarterly arm's length home sales in the city of Milwaukee, 2018-2023

The median nominal price paid for a home during April-June has increased each year since 2019, but recent price growth has trailed inflation.

This year’s median price in the second quarter was $170,000. When adjusted for inflation to the value of the June 2023 dollar, the median price was $172,000 in 2022 and $181,000 in 2021.

dot plot showing the quarterly median home sale price in Milwaukee

The number of home sales declined by at least a fifth in every aldermanic district over the past year. The smallest drops came in 4th district (covering downtown) and the 12th (the eastern half of the near south side). The sharpest declines occurred on in the north side’s 1st district (-45%) and the 14th district (-39%), which covers Bay View and surrounding areas.

Inflation-adjusted prices grew, year-over-year, in 7 districts and declined in 8. The greatest decline came in the 4th district, where the median price fell 14% between the 2nd quarters of 2022 and 2023. The largest proportional increase occurred in the 6th district, which includes Brewer’s Hill, Halyard Park, Harambee, and much of Riverwest. The median price jumped 39%.

maps showing the percentage change in sale volume and median price in Milwaukee aldermanic districts, comparing Q2 of 2022 with Q2 of 2023

As in the first quarter of this year, out-of-state landlords have switched from net buyers of Milwaukee houses to net sellers. During April, May, and June of this year, an out-of-state owner was the seller in 12% of transactions and the buyer in just 7%. A year ago, the relationship moved in the other direction, as owners outside Wisconsin bought 15% of transacted houses and sold 9%.

The behavior of Milwaukee’s out-of-state, private-equity backed landlords gives some insight into this change. After several years of rapid acquisitions, VineBrook Homes and SFR3 have both switched to selling Milwaukee houses. Transaction records show that VineBrook sold 20 houses during April, May, and June of this year. SFR3 sold 18, and neither company purchased any.

Data collected through mid-May showed that VineBrook was generally losing money on sales in 2023, while SFR3 was selling houses for far more than they originally paid. The rest of the 2nd quarter did not alter that finding.

I was able to make direct comparisons between the original purchase and final sale prices in 17 VineBrook transactions during April, May, and June. Records show that the company sold the houses for $1,267,500 collectively, after buying them for $1,326,140. That is a loss of $58,640, or 4.4%, not including any other expenses beyond the purchase price.

I likewise identified comparable acquisition records for 16 of SFR3’s 2023 second quarter sales. Collectively, SFR3 sold these houses for $2,671,800 after buying them for $1,274,009—a profit of $1,397,791, or 101% before additional expenses.

Flippers remained active in the market. The most prolific, Rentalvest LLC, bought 17 houses and sold 12, according to state transaction records. California-based Ace Property Acquisitions LLC bought 15 and sold 16. Smart Home Solutions LLC bought 9 and sold 10.

After several years of rapid owner-occupancy growth, homebuyer activity has cooled, but the trend remains positive. Through the first half of the year, parcel records indicate that the city has enjoyed a net increase of slightly more than 200 owner-occupiers.

A note on data

The statistics in this article are derived from a custom dataset matching state transaction records with city parcel data. Due to delays in the reporting process, the 2023 statistics are preliminary, and the final totals will likely be slightly higher than at present. About 1.5% of transactions could not be matched and are not included in this analysis.

Continue ReadingMilwaukee home sales volume follows to lowest in years, prices are trailing inflation

Gunfire Trends in Milwaukee, 2017-2023

A review of the Milwaukee Police Department’s call logs indicates that gunfire more than doubled during the pandemic in much of the city. At the same time, the likelihood any given gunfire incident was accompanied by a 911 call reporting “shots fired” declined on the north side, but not the south side. Data from the first 5 months of 2023 shows a modest decline in gunfire compared to the height of the pandemic-era violent crime wave, but levels remain much higher than 2019.

The trouble with just measuring reported crime

Milwaukee’s use of ShotSpotter technology provides a unique opportunity to measure a specific kind of crime in a way that doesn’t entirely depend on crime reports. This is helpful because the likelihood that a given crime is reported to the police varies by time and place.

During the COVID-19 pandemic, violent crime spiked in many American cities. Milwaukee set three annual homicide records in a row. After recording 97 homicides in 2019, the city endured 190 in 2020, 193 in 2021, and 214 in 2022 (according to MPD annual reports). The previous record was 168 in 1991, when the city’s population was about 50,000 more than today.

The summer of 2020 also saw massive protests against police killings of Black Americans, following the murder of George Floyd by officers in Minneapolis. Estimates suggest that between 15 and 26 million adults participated in demonstrations across the country during May and early June, making them the largest in American history.

Local crime trends are almost always measured by counting police reports, but these are, by definition, merely reported crimes. The rate at which actual criminal incidents are reported to the police no doubt varies among communities, by type of crime, and over time. The intense scrutiny of policing during the summer of 2020 may well have altered many Milwaukeeans’ likelihood of contacting the police.

The pandemic crime wave coincided with increased controversy over policing, making the relationship between reported crime and actual crime rates even more uncertain. Still, we do have objective data on both occurrences and reports for one type of crime–gunfire.

ShotSpotter uses a network of acoustical sensors to detect and triangulate the locations of gunshots based on the resulting soundwaves. The system covers only a portion of Milwaukee–one section on the north side and a smaller section on the south side. From a technical perspective ShotSpotter seems fairly accurate. An independent quantitative audit of company-provided data found the system was 97% accurate with about a 0.5% false positive rate.

Politically, ShotSpotter is more controversial. Various national organizations criticize the program as an expensive form of police surveillance with little evidence of actual reductions in violence. On the other hand, many local Milwaukeeans, including community activist Vaun Mayes, Director of the Office of Violence Prevention Ashanti Hamilton, and Chair of the Fire & Police Commission Ed Fallone all expressed at least qualified support for the program in recent interviews with the Shepherd Express.

ShotSpotter trends

Every time the ShotSpotter system reports a gunshot, it is logged into the MPD 911 call log under the code “SHOTSPOTTER.” When a human calls 911 to report gunfire, it likewise is logged with the code “SHOTS FIRED.” Each report includes a timestamp and address.

All call log data is published publicly, but the Milwaukee Police Department only keeps 1 hour of incidents online. I obtained records from local software developer Nick Gartmann, who maintains a public repository of historic MPD call logs. He generously provided data covering December 2016 through May 2023, with a few gaps of missing data. The Milwaukee Police Department refused to tell me the boundaries of the ShotSpotter coverage area, but a public information officer did confirm that the coverage area remained unchanged throughout this period. Using the addresses from the call log, I was able to reconstruct the ShotSpotter service areas as shown below.

Roughly, the north side coverage area stretches from I-43 to about 50th St., between the Menomonee Valley to the south and Capitol Drive to the north. The much smaller south side coverage area stretches from about 9th St. to 27th St., from Greenfield Ave. on the north to somewhat south of Lincoln Ave.

ShotSpotter Coverage Areas

Beginning in the summer of 2020, the ShotSpotter data shows an enormous increase in gunfire on the north side coupled with a large increase on the south side.

The north side coverage area recorded an average of 16.1 shots per day in 2019, increasing to 29.6 in 2020 and 39.2 in 2021. Gunfire ticked down slightly in 2022, to 37.5 per day.

The south side coverage area is much smaller. It saw a daily average of 2.9 ShotSpotter reports in 2019. That increased to 3.8 in 2020 and 4.2 in 2021, before falling back to 3.8 last year.

In the month of May alone, ShotSpotter recorded 25 incidents per day on the north side in 2017, falling to 15 in 2018, and 16 in 2019. That jumped to 31 in 2020 and 46 in 2021, before dipping to 42 in 2022 and 36 in 2023. The pattern on the south side has been generally similar.

bar plot showing average daily ShotSpotter reports for each month, Dec. 2016 - May 2023

In 2023, ShotSpotter incidents through May are slightly down since last year in the north side and slightly up on the south side. Compared to Jan – May of 2019, ShotSpotter reports are still up by 172% on the north side, compared with a 48% increase on the south side.

Average ShotSpotter reports per day in City of Milwaukee coverage areas

yearannualJan – May
north sidesouth sidenorth sidesouth side
Analysis of MPD call logs by John Johnson. Records are missing for some days, so this show the average for available days in each period.

ShotSpotter incidents vs. reports

To get a sense of how often gunshots identified by ShotSpotter also result in a 911 call, I applied the following simple test. I drew a circle with a half mile radius around the ShotSpotter alert location. Then, I checked if a contemporaneous 911 call for “shots fired” had occurred at any point inside that circle. To account for delays in the ShotSpotter upload process, I included any call that occurred within 10 minutes either before or after the ShotSpotter timestamp.

The graph below shows the results in the north and south side coverage areas for the past 7 years.

Only a small fraction of gunshots are reported to the police. Based on this analysis, just 5.1%, or about 3,300 out of 63,900 ShotSpotter reports since 2017 have been accompanied by a 911 call reporting “shots fired” within 10 minutes and half a mile of the identified location.

In 2017, similar shares of ShotSpotter reports resulted in 911 calls on both the north and south side coverage areas. Since then, the trajectories have diverged.

On the north side, the share of shots accompanied with a 911 call has declined every year beginning in 2019. The share of calls being reported has dropped from 5.7% in 2017 to 3.6% in 2023 through May. That’s a decline of more than a third.

On the south side, the share of ShotSpotter reports accompanied with a 911 call hovered between 5.1% and 6.2% throughout 2017-2022. Through May of this year, it has shot up to 7.6%. Through the first 5 months of 2023, gunshots appear to be twice as likely to result in a 911 call in the south side service area than the north side service area. That gap didn’t exist before the pandemic.

bar plot showing proportion of ShotSpotter reports accompanied by a 911 call reporting gunfire, annual statistics for each service area


This data reinforces the importance of remembering that crime reports are just that–incidents residents actively choose to report to the police. In conversation, I’ve heard from many Milwaukee residents that they rarely report gunfire and property crime to the police, simply because they view it as a pointless and frustrating waste of time. This data analysis indicates that (1) only a very small share of gunfire incidents are ever called in to 911, and (2) that small share has declined even further on the north side of the city, as the frequency of shootings more than doubled during the pandemic.

Continue ReadingGunfire Trends in Milwaukee, 2017-2023