It's been awhile since we've reported on the Dane County multifamily real estate market. Here's a brief update on the latest trends for income properties in the Madison area.
New multifamily listings
Note from the chart below that listing activity for income properties closely resembles the listing activity for single family homes. Through the first 7 months of 2024, only 162 Dane County income properties were listed for sale on the MLS -- the lowest year year-to-date total on record.
Months of supply
As of August 16th, there were only 34 active income property listings on the MLS (without an accepted offer). With just 1.9 months of supply available for sale, multifamily inventory remains tight in Dane County.
Multifamily sales
Fewer multifamily listings are selling due to the limited supply of properties. Only 120 income properties have sold through the month of July, which is the lowest year-to-date total in 13 years.
Price per multifamily unit
Income property prices have continued to rise in Dane County. Note from the chart below that the price per unit has tripled after bottoming out 12 years ago during the Great Recession.
Dane County gross rent multiplier
The gross rent multiplier (GRM) measures a rental property's sales price relative to its income producing potential (sales price/gross annual income). A market with low GRMs indicates an environment where investors can purchase at good values. A market with high GRMs indicates one where properties are more expensive.
Madison area gross rent multipliers have been at elevated levels for the last 9 years. The average GRM through the month of July was 10.9, an historically high number. Low supply and high demand have been pushing local prices and local GRMs higher. We expect the Dane County GRM to remain elevated for the foreseeable future. Here's one big reason why.
Do you questions have about investing in Madison area real estate?
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