Why there is a housing shortage in Marathon County?

The answer surprised me - as did the data I collected

Two separate narratives told around central Wisconsin that seem to conflict suggest this question: If Marathon County’s population is declining and more housing is being built, why is there still such a shortage of housing? Especially single-family housing?

Many people including myself had explanations for this phenomena, but I’m not sure any of them really hit the mark. Interest rates? Sure, they’re higher now relative to a few years ago when they reached their bottom. But today’s rates are much lower than what many baby boomers in the 1970s received when they bought their houses. And the shortage has been around for some time.

I think this has had an impact on liquidity - a person wanting to upgrade from a “starter” home to a larger one would pay a penalty if they bought their house from 2016 to, say, 2022.

What about a lack of single-family houses being built? That premise launched the first story in this series after a plan by the city to develop affordable housing on a remnant lot on Bridge Street went up in smoke after the city council got sticker shock (as in, a couple hundred thousand to give one family didn’t seem like a good idea). The limited data The Wausonian collected at the time looked like there was a downward trend in building new homes.

(The Wausonian received more housing data from all area municipalities going back much further and the picture is more complicated, as we will see.)

But there is one factor we hadn’t considered, and a staff member from the North Central Wisconsin Regional Planning Commission explained it recently. We will get to that soon. But first, some data.

Shrinking demographics

According to data from the Wisconsin Department of Administration, Marathon County’s population is set to shrink in coming years. Marathon County had 138,013 people in 2020. By 2030, that’s expected to shrink to 136,750 - then to 135,615 by 2040 and 130,380 by 2050, for a total drop from 2020-2050 of 5.5%

If that seems bad, Marathon County is leading the pack compared to other surrounding counties. Portage County is expected to drop by 16.4% in that same time period; Adams County is expected to drop 29%. That means the county will have a little more than 2/3 of its current population by 2050, if trends hold true.

The population decrease, partially linked to lower birth rates, is already having an impact. Wausau School District just adopted a plan to close several of its elementary schools as enrollments continue to drop every year. And that trend of declining enrollments is seen in statewide data as well.

With that in mind, it might be curious, then: Why does the commission’s housing study show Marathon County is going to need more units going forward - including 4,531 by 2040? Shouldn’t we need fewer?

The commission also gathered big housing projects to add them to the number of units needed. They estimate that the amount constructed or currently under construction (or close to being under construction) totals 2/3 of the amount they projected in 2022 that the area would need by 2025.

It highlighted finished projects such as the Schofield Mill apartments (84 units) and the Mountain Lane apartments i nWausau (87 units); works in progress such as the Foundry on Third project; and ones that haven’t quite gotten underway such as 700 Grand Avenue apartments. In total, they identified nearly 1,200 new units.

Wessel said the report didn’t include single unit construction because that would be too hard to track.

The Wausonian did track those units down, and indeed it wasn’t easy. But it also wasn’t impossible. It just took a little gumshoe hounding that journalists are (or at least were) known for.

Single-family home data

Based on early numbers it looked like there was a drop-off in single-family home construction. And there has been. But the numbers in the last couple of years, while representing a downtrend, still look better than 2015 and 2016.

The Wausonian created the below chart from data this publication collected from Wausau, Schofield, Weston, Rib Mountain and Rothschild. The numbers are the totals added together, but each municipality’s data was collected individually by asking public officials for it.

Below is a chart with the municipalities individually broken out.

Wausau had a huge spike in 2021 with a mobile home park starting to add units that year and into 2022, which skews the numbers a bit. If you were to remove those numbers, the downturn would look more severe.

What will be interesting is how the trend continues into the next few years. Will the number of new home permits continue to decline? Or is this just part of a natural cycle?

Why is there still a lack of housing?

The numbers are trending downward, but not that badly - certainly with the handful of houses lost to fire or demolition per year, the area must still be adding homes on the net, while the population is declining.

So what’s the deal?

First off, there is a reason homebuilding has slowed, says Cory Sillars. Sillars, who has been in the home-building business for a long time, has owned his own business since 2012, and has been president of the Wausau Homebuilders Association and the Wisconsin Homebuilders Association.

Sillars in speaking with a county committee recently laid out these points for why building has become challenging:

• Regulations: Sillars cited data from the National Homebuilders Association suggesting that $83,000 to $84,000 of the cost of a new home on average comes from regulation.

• Lack of in-fill lots: Wausau is especially running into this problem. As the city grows, there are just fewer places to build new single-family homes. Some of the remnant parcels Wausau has ended up with following reconstruction projects end up being difficult to build on - and that usually means more expensive. Sillars says another trend is that many are putting a single house on larger lots, which is great for them but decreases density in populated areas.

• Permit speed: Sillars says it’s not just the cost of regulations, but the number of agencies a homebuilder must work with and the speed with which the agency handles requests. Sillars gave an example of a home he was building on Lake Wausau. He needed an approval from FEMA and the agency waited until the end of the response window to tell him they had used the wrong form, starting the process over again. He said you also get different people within the same agency interpreting the rules differently, which causes delays and confusion.

• Increasing costs: Construction inflation has always historically been higher than consumer inflation - and with consumer inflation still higher than normal, construction costs are even more so. Delays in the process mean higher costs as those materials rise. Sillars says a home he was working on, because of a number of process delays, will now cost his client 10% more, barely at the edge of his budget.

So, if the county is adding units, and the population is decreasing, why are we running out of homes?

Sam Wessel of the North Central Regional Planning Commission had an answer that I hadn’t considered before: Fewer people are living in each housing unit.

Wessel didn’t include the research he was citing but it appears the average household size in 1960 was 3.3 people - in 2021 it was 2.5. That’s been a parabolic decline with a brief spike in household size in the early 90s.

In addition, according to a study from the Department of Housing and Urban Development, homeownership rates have been rising since the 1980s.

The same HUD report shows a similar long-term downward trend in household size.

(The numbers are lower than the previous data cited because they’re using median vs average.)

All this points to a confluence of factors toward why the area seems to lack the number of housing units it needs. But policymakers can look at some of those factors in determining how to increase the number of units to satisfy the Wausau area’s housing demand.

NOTE: All the data was collected and compiled from the various municipalities and processed through ChatGPT and Claude Sonnet. I did some minor tweaks to the Python code to match The Wausonian’s style.

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