Liam Beran
Rent increases in Madison are slowing, according to a report released July 29.
Siri Ullery moved from Wyoming two months ago for graduate school in library science at UW-Madison. In preparing for the move, she made a spreadsheet of 32 potential apartments to rent.
“It had prices, distance from bus stops, accommodations,” says Ullery, who also works part-time in the State Historic Preservation Office of the Wisconsin Historical Society. She says the process of applying for apartments was “exhausting” and expensive: “Each application cost around 30 to 50 bucks.”
Rather than living in Madison, she and her three roommates eventually chose an apartment in Cross Plains, where they each pay $560 in rent a month. She further saves money on parking by driving her car to a nearby strip mall and taking a bus to campus.
Median rents for one-bedroom and two-bedroom apartments in Madison have increased by 47% since 2020, according to a July 29 study by Apartment List, which found the city’s median rent for a one-bedroom apartment is $1,488, and a two-bedroom apartment is $1,664. That’s above the median price nationally, according to the report: $1,231 and $1,387, respectively.
But there’s a silver lining in the data. Vacancy rates in Dane County are currently at 7.1%, the highest they’ve been in more than five years, according to Apartment List. The vacancy rates in Madison remain lower, according to the latest figures available from the city’s planning division, at 3.6%.
“That’s an improvement from where we’ve been recently, but still well short of the 5-7% range that’s considered a healthy market,” Jaymes Langrehr, public information officer for the city's Department of Planning, Community and Economic Development, says in an email. Vacancy rates in the city dropped below 2% in 2022 and hovered around 2.5% in 2023, before gradually increasing beginning in 2024.
Also encouraging: yearly rent increases have slowed significantly compared to 2024 and the years prior.
A graph of apartment vacancies and month-to-month-rent growth.
Dane County vacancy rates improve, rent increases slow down (data compiled by Kurt Paulsen, UW-Madison professor of urban planning)
Kurt Paulsen, a UW-Madison professor who studies urban development and housing policy, says the region’s high rents and low vacancy rates spurred developers to build more housing: “We have had a lot of supply come online in the last year, and a lot in the pipeline in the last year. And you see that now in the fact that the vacancy rate has shot up.”
Still, Paulsen cautions that new construction will likely slow down as developers wait for these units to be absorbed into the market. High interest rates and tariffs on construction materials — the U.S. Department of Commerce recently announced it is tripling duties on Canadian lumber to 21% — pushed by the Trump administration are also likely to slow construction. And though rent growth has stagnated, Madison’s high prices are still pricing out many potential residents.
“If you're looking to retain people, you risk losing them because they can't afford to live here anymore,” says Zach Brandon, president of the Greater Madison Chamber of Commerce.
Luke Pearson works at a local nonprofit; he and his wife, who works in marketing for a milking equipment company, have lived for three years in a two-bedroom, two-bathroom apartment near the Hilldale Shopping Center. Their rent is about $2,700 with parking and extra storage, and they’ve had approximately $100 rent increases each year they’ve lived there. Though they love their apartment and its location, rents have started to outpace their salary increases, Pearson says, and staying for another two years would likely “become unaffordable.”
“We're in this position where we don't want to have to move, but with the rent increases, we might have to,” he adds.
The pair is looking at purchasing a home in Madison or in a suburb like Fitchburg or Verona, though Pearson says “that's obviously really difficult now too.” There were just 578 single family homes newly listed for sale in July 2025 in Dane County, according to Dan Miller, a Realtor with Mad City Dream Homes and Realty. That’s still well below new listings prior to the 2008 recession.
“My experience with the rent increases is you can get in somewhere for a price that you can afford, but you get pretty quickly priced out of it, unless you start in way under your budget,” Pearson says. “It's also making it difficult to save up for a house when we're kind of at the upper end of our budget for rent.”
The housing supply in Dane County has not kept up with population growth for more than a decade. From about 2006-2022, according to Brandon, Dane County “underbuilt” homes for sale and rentals by approximately 13,000 units. Throughout the same period, the county’s population grew by around 65,000, driving up costs for renters and homeowners alike.
“The crux of our challenge is the underproduction of housing units across the board,” Brandon says. More affordable units are needed, he says. But adding more market-rate housing, he argues, will also prevent “renting down” — when the lack of options on the market leads to people with high incomes renting lower-cost apartments and reducing opportunities for lower-income renters. Around 77% of renters above the median income level are “renting down,” according to the city’s planning division.
Paulsen agrees with Brandon that constructing more homes would help lower rents. Getting “marginal households,” like Pearson’s, into homes is one way to increase vacancy rates and therefore reduce rent: “You can increase vacancies one of two ways: either by having renter households leave the market, or…by building more rental housing.”
Retail and service industry workers are some of the hardest hit by high rental prices, Paulsen says, given that there’s such strong demand to live downtown: “It's still the case that, particularly in downtown for service industry workers, there's nothing close to affordable in the market or the stuff that is affordable is very low quality or very old.”
Service industry business owners are faced with a choice of paying employees more — meaning their product prices will go up — or accepting that they might lose their employees to growing rent costs.
“If you hire a waitress or a waiter, and they can't afford to live here, so you pay more — that gets transferred somewhere else, whether it's in the sandwich or whether it's in the soda,” says Brandon. “It's got upstream and downstream economic challenges for us when we have housing cost pressures.”
Substantial population growth could further constrain housing availability: Madison is expected to gain 115,000 residents by 2050, a 30% increase, and the county 217,000 residents, a 38% increase.
Given this expected growth both the city and county have called for more housing of all types. Dane County’s Regional Growth Strategy, adopted in 2024, calls for 139,000 homes to be built by 2040; Madison’s goal, set in 2025, is to add 15,000 more homes by 2030. The city’s progress so far is on track: 1,202 homes have been built in 2025, with an additional 5,000 in the pipeline. The number of homes completed in Madison in 2024, according to the city’s planning division, was 3,040, higher than any year since 2019.
As the housing industry grapples with continued high interest rates and new tariffs, it remains to be seen whether the pace of new construction will continue. Adding more housing stock is key to controlling rent prices — when vacancy rates are above 5%, rents decrease, says Paulsen. When they’re below 5%, rents increase.
Madison’s city council has also recently approved zoning changes meant to promote density and make construction more predictable. Brandon is supportive of such measures, and says the Chamber also supports additional investments in transportation and transit oriented development — increasing density along major transit routes like Madison’s bus rapid transit system.
But he acknowledges no one effort is a panacea.
“All of this is a bit of whack-a-mole, right? The challenge of it is how complicated it is and how fast things move.”
[Editor's note: This article was updated to correct a sentence attributed to Paulson that originally mentioned "decreasing," not increasing, vacancy rates by increasing homeownership.]
