[User] Although gains are expected in nearly every sector, job growth is projected to be greatest in the professional and business services sector because of continued job growth from commercial applications of research conducted at UW-M. Population and Households T he population of the Madison HMA is an estimated as of June 1, 2015. The population of the HMA has increased by an average of 6,625, or 1.1 percent, annually since April 2010. Net in-migration to the HMA since 2010 has averaged 3,275 people annually and accounted for approximately 50 percent of the HMA’s population growth during this time. Dane County, where the city of Madison is located, has an estimated population of which accounts for more than 80 percent of the HMA’s population. The strongest period of population growth in the HMA during the previous decade coincided with the strongest period of job growth, 2000 to 2002, when the population increased by an average of 7,400, or 1.4 percent, an- nually. Net in-migration during that period averaged 4,225 people per year (Census Bureau population estimates, as of July 1), accounting for 57 percent of population growth. From 2002 to 2009, population growth averaged 7,050 people, or 1.2 percent, a year, with annual growth ranging from 1.1 to 1.3 percent. During the period, net in-migration averaged 3,350 people annually and accounted for 48 percent of all population growth. Job losses in the HMA slowed net in-migration to 1,100 people in 2010, and the popula- tion increased by only 4,700, or 0.8 percent. The number of households in the HMA is currently estimated at an average annual increase of 2,775, or 1.1 percent, since 2010. During the 2000s, households increased at a higher rate of 1.5 percent, or 3,500 households, annually. Since April 2010, renters have comprised nearly 75 percent of household growth, which is up signifi- cantly from the average of 27 percent from 2000 to 2010. Components of Population Change in the Madison HMA, 2000 to Forecast Notes: The current date is June 1, 2015. The forecast date is June 1, 2018. Sources: 2000 and 2010—2000 Census and 2010 Census; current and forecast— estimates by analyst Economic Conditions Continued to to current Current to forecast Average annual change Net natural change Net migration

[Assistant] During the forecast period, the number of households in the HMA is expected to increase by an average of 3,425, or 1.3 percent, annually, while population growth is expected to average 7,775, or 1.2 percent, annually. Approximately 95 percent of the population and household growth during the forecast period is likely to occur in Dane County.


[User] Number of Households by Tenure in the Madison HMA, 2000 to Current Note: The current date is June 1, 2015. Population and Household Growth in the Madison HMA, 2000 to Forecast Notes: The current date is June 1, 2015. The forecast date is June 1, 2018. Sources: 2000 and 2010—2000 Census and 2010 Census; current and forecast— estimates by analyst Housing Market Trends Sales Market The sales housing market in the Madison HMA is currently slightly tight. Increasing home sales and limited homebuilding activity from 2008 through 2013 resulted in a decline in the estimated sales vacancy rate from 2.0 percent in April 2010 to 1.2 percent currently. During May 2015, the HMA had a 4.6-month supply of inventory on the market, down from a 5.9-month supply during May 2014 and a 6.5-month supply during May 2013 (Realtors® Association of South Central Wisconsin). In May 2015, 2.5 percent of all mortgage loans in the HMA were seriously delinquent (90 or more days delinquent or in fore- closure) or had transitioned into real Population and Households Continued Current Renter Owner Population Households to to current Current to forecast Average annual change New home sales (including single- family homes, townhomes, and con dominiums) in the Madison HMA totaled 680 during the 12 months ending May 2015, an increase of only 10 sales from the 12 months ending May 2014 (Metrostudy, A Hanley Wood Company). The average sales price of a new home was during the 12 months ending May 2015, an increase of $35,300, or nearly 13 percent, from the previous 12 months as strong demand for new homes is outpacing the ability of developers to deliver new product. New home sales in the HMA peaked in 2006 with 1,725 sales at an average price of . Following the peak, new home sales declined for 6 consecu- tive years by an average of 190 sales, or slightly more than 16 percent, an- nually from the end of 2006 through 2012. The average sales price also declined during this time, but the drop was not as sharp. From 2006 through 2012, the average sales price of a new home declined by an average of $1,300, or less than 1 percent, annually to by the end of 2012. During 2013, the market for new homes re- bounded and sales increased by 180, or more than 30 percent, to 780 sales. The average sales price of a new home was during 2013, an increase of $11,000, or nearly 5 percent, from the previous year. Sales of existing homes (including single-family homes, townhomes, and condominiums) increased in the Madison HMA during the 12 months ending May 2015. Existing home sales totaled 10,250, an increase of 150, or slightly more than 1 percent. Existing home sales reached a new high in 2013, when 10,400 existing homes sold, which was 50 sales, or less than 1 percent, higher than the previous peak level of 10,350 sales during 2006. The average sales price of an existing home in the HMA was during the 12 months end- ing May 2015, which was an increase of $8,900, or more than 4 percent, from the previous 12 months, when the average sale price increased by $20,700, or nearly 11 percent. After peaking in 2006, sales of existing homes declined for 5 consecutive years by an average of 780, or 9 percent, annually to 6,450 existing homes sold in 2011. The average sales price de creased at a lower rate, declining from in 2006 to during 2011, an average decline of less than 1 percent annually. During 2012, sales of existing homes increased by 2,625 sales, or nearly 41 percent, to 9,075. The number of existing home sales was accompanied by a sharp drop in the average sales price, which declined by $21,800, or more than 10 percent, to during 2012. The large increase in the number of existing home sales and the corre- sponding price drop during 2012 were because of an increase in REO sales to 1,350, an increase of 320 sales, or 31 percent, from 2011. The average sales price of an REO property was during 2012, a decline of $11,200, or 8 percent, from 2011. Dur- ing REO properties sold, and this number steadily increased by an average of 170, or nearly 42 percent, annually to 1,025 REO sales in 2011. Since peaking in 2012, REO sales have been steadily declining in the HMA. During the 12 months Housing Market Trends Sales Market Continued Building activity, as measured by the number of single-family homes per- mitted, was unchanged during the 12 months ending May 2015, with 1,275 single-family homes permitted (preliminary data). Building activity started to increase in 2013 after the downturn because of the housing crisis in 2008. From 2012 through 2014, an average of 1,125 new homes were permitted annually. Even with the recent increase in single-family home permitting, production is still well below previous periods. Single- family home construction peaked in 2003 with 3,500 homes permitted and averaged 3,050 homes annually from 2000 through 2003. The number of single-family homes began to decline in 2004, and continued to decline to a low of 740 single-family homes permitted in 2011. One of the more recent developments in the HMA is West Prairie Village in northwest Dane County. This project has 213 single-family lots, with the first phase of 115 homes currently under development. Home sales prices at this development range from to for three- and four-bedroom homes. In addition, the Westbridge subdivision in Waunakee is a 283-unit single-family home development ex- pected to complete buildout in 2015. Home prices range from to at this subdivision.

[Assistant] Demand is estimated for 6,275 new homes in the Madison HMA during the 3-year forecast period, with de- mand increasing during each year ( Estimates by analyst Housing Market Trends Sales Market Continued


[User] The apartment market in the HMA is balanced. The vacancy rate during May 2015 was 6.8 percent, up from 4.8 percent 1 year earlier (Reis, Inc.). The increase in the current vacancy rate is because the many apartment units completed during the past 2 months are likely to be leased as students return to school in August. The average rent for an apartment is currently $994, which is up $46, or nearly 5 percent, from the previous year. The apartment vacancy rate declined from 7.0 percent during 2006 to 4.9 percent in 2009 and again to 2.7 percent in 2012 because of limited multifamily construction and an increase in the formation of renter households. At the end of 2012, the average rent for an apartment in the Madison HMA was $867, an average increase of $18, or more than 2 per cent, annually from the end of 2009. Multifamily construction started to increase in response to tightening apartment market conditions in 2012, and, as those new units began to come on line, the apartment vacancy rate increased, reaching 4.1 percent during 2013. The average rent for an apart- ment increased by $56, or more than 6 percent, to $923 in 2013. Multifamily construction, as measured by the number of units permitted, has increased significantly since the end of 2011 as builders have responded to tight rental market conditions. During the 12 months ending May multifamily units were permit- ted, an increase of 450 units, or 15 percent, from the previous 12 months (preliminary data). The current level of production is significantly higher than the average of 2,300 multifamily units permitted annually from 2000 through 2006. With the start of the economic downturn in 2007, multi family construction declined to an average of 1,075 units permitted an- nually from 2007 through 2011. From 2012 through 2014, with tight apart- ment market conditions and above average population and job growth, the number of multifamily units per- mitted increased significantly, peaking at 4,075 units permitted in 2014. During the 2014–2015 academic year, UW-M had an enrollment of more than 43,250 students, only 8,100 of whom lived on campus. The large number of students living off campus has a significant impact on the local housing market, and the rental market in particular. Rental Vacancy Rates in the Madison HMA, 2000 to Current Note: The current date is June 1, 2015. Sources: 2000 and 2010—2000 Census and 2010 Census; current—estimates by analyst Housing Market Trends Continued 2000 Current Multifamily Units Permitted in the Madison HMA, 2000 to Current Notes: Excludes townhomes. Current includes data through May 2015. Sources: U.S. Census Bureau, Building Permits Survey; estimates by analyst students at the university account for more than 13 percent of all renter households in the HMA and more than 35 percent of all renter house holds in the city of Madison. With this large number of students living off campus, part of the recent surge in multifamily construction are new apartment units that have been devel- oped to meet the housing needs of students. Since 2012, more than 3,450 apartment units have been permitted within a ZIP Code that borders the university, accounting for more than 40 percent of all apartment units permitted in the HMA during that time. Apartments within ZIP Codes that border the university currently have a vacancy rate of 13.2 percent (Reis, Inc.). The high vacancy rate may be caused in part by the nearly 700 units that have come on line dur- ing 2015 and were not available for students to rent until the start of the 2015–2016 school year. Although not strictly restricted to students, these new units will have anywhere from one to five bedrooms in each unit, with residents of these units being able to sign a lease on a per-bedroom basis, instead of a group of roommates signing a lease for the whole apartment together. Apartments located within a ZIP Code that borders the university have an average rent of $1,857, which is 87 percent higher than the HMA average. Part of the reason for higher rents around the university is because apartments with four and five bed rooms, which do not exist elsewhere in the HMA, have higher rents. Also, many of the units that cater to student housing needs come with most utili- ties included in the rent.

[Assistant] Enrollment at UW-M is expected to remain flat until the fall of 2018, when enrollment is expected to increase because more high school graduates are expected in the state of Wisconsin. The university has no current plans to construct new on-campus housing but will be under taking several renovations of existing dormitories during the next 3 years.


[User] For purposes of this analysis, the HMA is divided into three submarkets: (1) the Cook County submarket, which includes the principal city of Chicago; (2) the Northern Counties submarket, which includes DeKalb, DuPage, Kane, Lake, and McHenry Counties in Illinois and Kenosha County in Wisconsin; and (3) the Southern Counties submarket, which includes Grundy, Kendall, and Will Counties in Illinois and Jas- per, Lake, Newton, and Porter Counties in Indiana.

[Assistant] Summary Economy Economic conditions in the Chicago HMA have improved since 2011, following 3 years of declines. During the 12 months ending May 2016, nonfarm payrolls totaled 4.62 million jobs, reflecting a growth of 75,800 jobs, or 1.7 percent, from a year earlier. During the 3-year forecast period, nonfarm payrolls are expected to increase an average of 1.5 percent annually. Although the professional and business services sector is the largest employment sector in the HMA, the largest employer is the U.S. Government, with approximately 45,650 jobs as of December (Crain’s Chicago Business).


[User] Sales Market Sales housing market conditions in the HMA are soft but improving, with the sales vacancy rate estimated at 2.1 percent, down from 2.6 percent during April 2010. Demand is forecast for 25,375 new homes during the next 3 years, which includes 1,300 mobile homes (Table 1). The 3,075 single-family homes, townhomes, and condominiums currently under construction and a portion of the other vacant housing units that may reenter the sales market will satisfy some of the demand during the forecast period. Rental Market The rental housing market in the HMA is currently balanced. The estimated overall vacancy rate is 6.6 percent, down from 9.3 percent in 2010. The apartment market in the HMA is slightly tight, however, with a vacancy rate of 4.5 percent as of the first quarter of 2016 (MPF Research). During the next 3 years, demand is estimated for 19,375 new market-rate rental units, including the approximately 14,410 units currently under construction (Table 1).

[Assistant] Housing Demand in the Chicago HMA* During the Forecast Period Chicago HMA Cook County Submarket Northern Counties Submarket Southern Counties Submarket Sales Units Rental Units Sales Units Rental Units Sales Units Rental Units Sales Units Rental Units Total demand Under construction * Chicago-Naperville-Elgin HMA. Notes: Total demand represents estimated production necessary to achieve a balanced market at the end of the forecast period. Units under construction as of June 1, 2016. A portion of the estimated other vacant units in the HMA will likely satisfy some of the forecast demand. Sales demand includes an estimated demand for 1,300 mobile homes. The forecast period is June 1, 2016, to June 1, 2019. Source: Estimates by analyst Economic Conditions T he Chicago region developed as a transportation hub for water transit, linking the Mississippi River and the Great Lakes, before transforming into the nation’s railroad hub during the mid-19th to late 19th century. Throughout its history, Chicago has been a center of whole- sale and retail trade, provisioning the nation during its westward expansion and producing some of the nation’s largest retailers, including Sears, Roebuck and Co.; Marshall Field & Co.; and Montgomery Ward & Co. During the 20th century, Chicago developed into a major manufacturing center, producing farm equipment, food, railroad cars, and steel. Today, Chicago is also a center of govern- ment, business, higher education, and health care.


[User] Recent additions in this sector include jobs at Capital One, which announced plans in late 2013 to expand in downtown Chicago. Since that announcement, approximately 600 new employees have joined Capi- tal One Financial Corp. offices at the downtown Chicago location and an existing location in suburban Rolling Meadows. Finland-based Nokia Corporation purchased Chicago-based Navteq Corporation, a digital-mapping firm, in 2008 and has added staff each year since 2012. The company, now called HERE, employs approximately 1,200 workers in the HMA. Chicago is encouraging technology growth in the city with The City of Chicago Technology Plan, approved in the fall of 2013, which highlights 28 initiatives in 5 broad strategies: Next-Generation Infrastructure; Every Community a Smart Community; Efficient, Effective, and Open Government; Civic Innova- tion; and Technology Sector Growth. The number of jobs in digital em ployment, defined as software, B2B (business-to-business) web, consumer web, and ecommerce, increased from 33,000 in 2012 to 54,000 in 2015 (builtinchicago.org). Jones Lang LaSalle Inc., which produces the annual Technology Office Outlook report, for 2015, ranked Chicago as the fifth most promising location nationally for technology expansions based on a composite score account- ing for tech economic momentum, talent pool, startup friendliness, and market factors. Digital employment jobs in Chicago are primarily concen- trated in three community areas: The Loop (which includes downtown) and the Near West Side and River North, the latter two of which are adjacent areas west and north of The Loop. The Loop community area includes more digital technology employers than any other area in the HMA, and the River North community area hosts more technology firm startups. Current Nonfarm Payroll Jobs in the Chicago HMA,* by Sector * Chicago-Naperville-Elgin HMA. Note: Based on 12-month averages through May 2016. Economic Conditions Continued Government 12.0% Other services 4.2% Leisure & hospitality 10.0% Education & health services 15.3% Professional & business services 17.5% Wholesale & retail trade 15.5% Manufacturing 9.0% Mining, logging, & construction 3.7% Transportation & utilities 4.8% Financial activities 6.4% Information 1.8%

[Assistant] Additional technology jobs are expected to follow when firms seek to locate near Google. The announcement of this move by Google in 2013 contributed to the growth of restaurants in the area and was a primary contributor to the development of new hotel capacity in the Near West Side. Other technology companies with substantial employ- ment in Chicago include Groupon Inc. (2,000 employees) in the River North community area and inflight wireless provider Gogo (more than 700 employees) in the Near West Side community area.


[User] The three largest employers in the HMA are governments, currently the fourth largest employment sector in the HMA (Table 3). The government sector increased by 7,600 jobs, or 1.4 percent, during the past 12 months, all in local government employment, as federal and state government employment, in general, was stable. The next two largest employers in the HMA are Advocate Health Care and The University of Chicago, both in the education and health services sector, which recorded the second largest number of nonfarm payroll gains, 14,000 jobs, or 2.0-percent growth, during the past 12 months.

[Assistant] During the forecast period, nonfarm payrolls are expected to increase an average of 1.5 percent, or by 69,200 jobs, annually. Job growth is expected to continue to expand in the profes- sional and business services sector because many technology firms plan Crain’s Chicago Business, as of December Economic Conditions Continued Glassdoor, an online human resources company, plans to hire more than 250 workers in Chicago during the next 3 years, and Avant, Inc., an online lending institution, expects to hire up to 600 new workers. ConAgra Foods, Inc., announced it is moving its headquarters from Omaha, Nebraska, to Chicago during the summer of 2016. Although this move may result in the loss of approximately 1,500 jobs overall for the company, 700 jobs are expected to relocate to Chicago as a result. ConAgra Foods joins 31 current Fortune 500 companies with headquarters in the HMA; Chicago is ranked the number two North American city for international business headquarters (World Busi- ness Chicago, September . Employment is expected to increase in the education and health services sector, in part, because Rush Univer- sity Medical Center announced plans to build a new $500 million outpatient center at its hospital campus in the Near West Side neighborhood. The number of jobs to be added as a result of this expansion was uncertain at the time of this report. Employment is expected to grow in the construction subsector as additional commercial and residential construction is undertaken, and growth is expected to continue in the leisure and hospi- tality sector as new hotel properties are brought on line during 2016 and 2017. A number of cutbacks have been announced, however, which will impact employment during the next 3 years. Contractions include Motorola Mobility, which has begun the process of cutting 500 jobs from its Chicago workforce, and the loss of 270 office jobs from the Walgreen Company. Both cuts were announced during the summer of 2015. In the information sector, Harpo Studios, which has operated in the Near West Side neighborhood since 1990, is relocating all Chicago-based produc- tion efforts to California, resulting in the loss of approximately 180 jobs.


[User] Population and Households T he population of the Chicago HMA has increased by 14,100, or 0.1 percent, annually since 2010, to an estimated 9.55 million as of June 1, 2016. (Tables DP-1 through DP-4 at the end of this report provide information on population growth in the HMA and submarkets.) Net population gains in the HMA can be attributed entirely to net natural increase (resident births minus resident deaths). The HMA has recorded net out-migration every year since 1991. Population growth averaged 0.4 percent annually, or 36,300 people, during the previous decade. From 2000 to 2004 (Census Bureau, July 1 estimates), the population in the HMA grew by 38,200, or 0.4 percent, with net out-migration averaging 33,950 people annually. From 2001 through 2003, nonfarm payrolls in the HMA declined 1.2 Economic Conditions Continued Components of Population Change in the Chicago HMA,* 2000 to Forecast * Chicago-Naperville-Elgin HMA. Notes: The current date is June 1, 2016. The forecast date is June 1, 2019. Population and Household Growth in the Chicago HMA,* 2000 to Forecast * Chicago-Naperville-Elgin HMA. Notes: The current date is June 1, 2016. The forecast date is June 1, 2019. Sources: 2000 and 2010—2000 Census and 2010 Census; current and forecast— estimates by analyst percent each year and registered an increase of only 1,900 jobs during 2004. From 2005 through 2007, non- farm payrolls in the HMA increased 1.1 percent annually; however, payroll growth averaged 1.5 percent annu- ally in the United States during that period. Thus, more job opportunities in other areas of the country relative to the HMA led Chicago residents to move to faster-growing areas, and out-migration increased to 45,550 people from 2004 to 2007, leading to a slower population growth rate of 0.3 percent annually. After register- ing a growth of 37,400 jobs, or 0.8 percent, during 2007, the economy in the HMA and the national economy both contracted sharply from 2008 through 2010. During this time, from 2007 to 2010, net out-migration decreased by nearly 50 percent, to 23,650 each year, leading to popula- tion growth of 45,100 people, or 0.5 percent, annually. Although the economic downturn was more severe in Chicago than it was for the nation, comparatively fewer jobs were available outside the HMA. Also, with home values contracting and more stringent mortgage lending standards in place, homeowners were less mobile because of difficulty in selling their homes. The Northern Counties and Southern Counties submarkets comprise 29 and 16 percent, respectively. These proportions are unchanged from 2010. The Cook County submarket, with an estimated population of 5.23 million as of June 1, 2016, has increased by 6,050, or 0.1 percent, annually since 2010. Net population growth in the Cook County submarket since 2010 has been greater than growth in the other submarkets, accounting for nearly 43 percent of the total gain for the HMA. This growth represents a reversal from the average annual population declines of 18,200, or 0.3 percent, during the previous decade. Significant population loss during the early part of the decade overshadowed growth that began in Cook County during 2007. From 2000 to 2006, the population of Cook County declined by 33,800 annually, or 0.6 percent, and net out-migration averaged 71,650 people a year. From 2006 to 2012, however, the level of net out-migration from Cook County declined, averaging 25,050 annually, and the population began to grow during 2007. Local officials indicate that declining net out-migration from Cook County from 2007 to 2010 was a result of people wanting to remain closer to the downtown employment center, with shorter commutes and access to the city’s public transit system. Net out-migration began to increase again during 2012 and has averaged 28,550 people annually since 2012. Certain suburban Cook County communities such as Glenview, Orland Park, and Evanston have gained resi- dents since 2010, but more than 50 percent of the population growth in Cook County between 2010 and 2013 was in the city of Chicago. Beginning in 2014, population in both the city and the county began to decline. In the downtown Chicago area within the Cook County submarket are three neighborhoods of expanding technology employment: The Loop, the River North, and the Near West Side (hereafter, the Downtown Area). The population in the Downtown Area has increased by an estimated 6,900, or 4.1 percent, annually since 2010, contributing nearly 60 percent of the population growth in the Cook County submarket during the period. The population of this area, which was in 2000, grew to in 2010 and is currently estimated to be . The Northern Counties and Southern Counties submarkets have populations currently estimated at 2.75 and 1.57 million, respectively, with increases of 5,675 and 2,375, or 0.2 percent each, annually since 2010. During the 2000s, population growth averaged 26,450 people annually in the Northern Counties submarket and 28,000 people annually in the Southern Counties submarket, rates of 1.0 and 2.0 percent, respectively. In both submarkets, net in-migration was recorded during the earlier years of the decade and turned to net out-migration by the end of the decade. In the Northern Counties submarket, net in-migration averaged 11,150 people from 2000 to 2004, contributing to population growth of 35,150 people, or 1.4 percent, during the period. From 2004 to 2010, net out-migration averaged 1,350 people annually, and the population growth declined to 20,050 people, or 0.8 per- cent, annually, coinciding with similar demographic patterns recorded for Population and Households Continued In the Southern Counties submarket, net in-migration averaged 23,450 people annually from 2000 to 2007, leading to population growth of 33,700 people a year, a 2.5-percent annual gain. From 2007 to 2010, net in-migration averaged 2,400 people annually, significantly less than the previous level, and popula- tion growth declined to 13,000 people, or 0.9 percent, annually. Although the Southern Counties submarket aver- aged annual net in-migration for the decade from 2000 to 2010, net out- migration began during 2009. Since 2010, net out-migration has occurred in both submarkets, averaging 9,025 people annually from the Northern Counties submarket and 4,675 people annually from the Southern Coun- ties submarket. Growth in the two submarkets is generally aligned with transit linkages to Chicago, along major highways such as Interstate 55 (I-55), I-88, and I-90, and also in proximity to transit stations along several Metra commuter rail lines. The changes in migration patterns across all three submarkets are mod- estly related. Migration from Cook County into the other two submarkets increased from 2001 through 2006 and then declined from 2006 through 2010 (Internal Revenue Service). Since 2010, migration from Cook County into the two submarkets has begun to expand again. By contrast, net in-migration from the suburban submarkets to Cook County, in gen- eral, was stable through 2006, before increasing from 2006 through 2012. During 2013, the most recent data available, however, net in-migration from the two suburban submarkets into Cook County declined, in part, because overall net out-migration, to any destination, declined. The Cook County submarket has also attracted a larger number of new migrants into the HMA. From 2010 through 2013, migration from outside the HMA to the Cook County submarket accounted for approximately 41 percent of overall immigration to the HMA, up from 38 percent during the previous decade. The number of households in the Chicago HMA has increased by 10,900, or 0.3 percent, annually since 2010, which is below the average annual 0.6-percent rate, or 19,550 households, recorded during the previous decade. The lower rate of household formation is because of slower population growth since 2010. Mirroring population dynamics, growth in the number of households has slowed in the Northern Counties and Southern Counties submarkets and has increased in the Cook County submarket since 2010. In the Cook County submarket, household change during the previous decade was most- ly stable, averaging declines of 780 households annually. This trend has reversed since 2010, and household growth averaged 6,325 households annually, or 0.3 percent, to a current total of 2.01 million households. Household growth during the previ- ous decade in the Northern Counties and Southern Counties submarkets were 10,650 and 9,675 households annually, gains of 1.2 and 2.0 percent, respectively. Since 2010, household growth has slowed in each submarket, to 2,900 households annually in the Northern Counties submarket and 1,625 households annually in the Southern Counties submarket, rates of 0.3 percent each, to current totals of and households, respectively. Because of the effects of the most recent economic recession Population and Households Continued Number of Households by Tenure in the Cook County Submarket, 2000 to Current Note: The current date is June 1, 2016. Number of Households by Tenure in the Northern Counties Submarket, 2000 to Current Note: The current date is June 1, 2016. Number of Households by Tenure in the Southern Counties Submarket, 2000 to Current Note: The current date is June 1, 2016. Sources: 2000 and 2010—2000 Census and 2010 Census; current—estimates by analyst and more stringent lending standards, household growth since 2010 has been in renter households. This trend toward renting is true in each submar- ket in the HMA; all net household growth was in renter households.

[Assistant] Because of the modest economic fore- cast, population growth in the HMA during the next 3 years is expected to remain at 0.1 percent, equal to 5,000 people annually. During this time, net natural increase will continue to account for all population growth because net out-migration should continue, averaging 42,400 people annually. Population is expected to decline slightly, by 330 annually, in the Cook County submarket. The population is forecast to expand 0.2 percent, or by 4,325, annually in the Northern Counties submarket and 0.1 percent, or by 1,000, annually in the Southern Counties submarket. The number of households is expected to increase in each submarket, at rates of 0.2 percent in the Cook County and Southern Counties submarkets and at a higher 0.3-percent rate in the Northern Counties submarket. This expected household growth leads to forecast household counts of 2.02 million, and in the three submarkets, respectively, and an HMA household count of 3.57 million. The economic recovery in the HMA, comparatively low levels of single- family home construction, and increasing population since 2010 have contributed to improvement in the sales housing market. The continu- ing effects of the previous national recession that ended in 2009, tighter mortgage lending standards, and a shift to rental tenure in the submarket, however, contributed to a decline in the homeownership rate, which is cur- rently estimated at 56.0 percent, down from 58.2 percent in April 2010. During the 12 months ending April 2016, new and existing home sales (including single-family homes, town homes, and condominiums) increased in the submarket. New home sales totaled 1,800 homes sold during the past 12 months, 17 percent more than a year earlier, and the average new home sales price was per- cent below the average price from the previous year (CoreLogic, Inc., with adjustments by the analyst). New home sales averaged 6,600 homes sold during 2002 and grew nearly 50 percent each year, until reaching the recent peak of 20,300 homes sold during 2005. New home sales remained elevated, averaging 16,650 homes sold annually during 2006 and 2007 before falling sharply during 2008, to 8,100 homes sold, coinciding with the onset of the most recent national recession. During 2009 and 2010, as the local and national economies continued to contract, new home sales fell further, dropping 41 percent during 2009, to 4,800 homes sold, and to 3,425 homes sold during 2010. During 2011, new home sales fell again, to 1,600 homes sold, a 53-percent decline from 2010. Local real estate professionals attribute this decline, despite improving economic conditions, to dislocations in the mortgage lending market, specifically the requirement for higher down pay- ments, which impacted higher-priced new home sales more than the resale housing market. In addition, a shift toward rental housing occurred, with large numbers of new apartments entering the Cook County submarket, in both the city of Chicago and sub urban locations, which were absorbed quickly. Since 2011, new home sales have remained low, totaling 2,000 homes sold during 2012 and 2,100 homes sold during 2013. By contrast with new home sales, average new home sales prices have increased since bottoming out in 2011. The average new construction home sales price increased 1 percent annually from 2003 through 2007, before rapid growth of 23 percent during 2008, to . The high sales price during 2008 was at the end of the inflated housing market in the Chicago HMA, and, when sales declined during 2008, the average sales price also fell, but not as severely. New home sales prices averaged during 2009 and 2010 and the number of sales declined. The average new home sales price declined 9 percent during 2011, As with new home sales, existing home sales are also below previous highs, but sales prices for existing homes have not recovered as strongly as new home sales prices. Existing home sales in the submarket in- creased during the past 12 months, to 61,700 homes sold, a 2-percent gain from a year earlier. The average sales price during the period was up more than 11 percent from the previous year. Sales of existing homes averaged 78,450 homes sold annually during and 2003 and increased to an average of homes sold annually during 2004 and 2005, the peak for existing home sales activity. Following this 2-year peak, existing home sales fell during the next 3 years, declining an average of 28 percent annually from the end of 2005 through 2008, to average 40,600 homes sold annually from 2009 through 2011, when the local and na- tional economies weakened. During 2012, home sales increased to 51,600 homes sold, up 25 percent from 2011. Existing home sales continued growing to an average of 61,650 homes sold annually during 2013 and 2014, signs of a modest recovery in the market. The average sales price for an existing home in the submarket grew steadily, from during 2001 to during 2007, with gains averaging nearly 6 percent annually before dropping 6 percent annually during the next 5 years to the recent low average sales price of during 2012. The largest single-year decline in home sales prices was 18 percent during 2009, the same year as the greatest number of nonfarm payroll job losses in the HMA. As economic conditions began to improve and the population began to grow, average sales prices rose, gaining 11 percent during 2013 and 9 percent during 2014, to an average price of . Seriously delinquent loans and distressed sales have had a negative impact on existing home sales prices in the HMA during recent years. In April 2016, 4.5 percent of mortgage loans in the Cook County submarket were seriously delinquent (90 or more days delinquent or in foreclosure) or had transitioned into real estate owned (REO) status, down from 6.0 percent a year earlier (CoreLogic, Inc.). By comparison, the rate of seriously delinquent loans and REO properties in the state of Illinois for April 2016 was 3.5 percent, down from 4.6 percent during April 2015. The national rate was 2.9 percent during April 2016, down from 3.7 percent a year earlier. The percentage of distressed sales (REO and short sales) as a proportion of all existing sales in the submarket was less than 5 percent until 2008, when it began increasing precipitously, peaking at 37 percent during 2011. The effect that distressed home sales have on average sales prices is significant. During 2011, when distressed home sales peaked as a ratio of all existing home sales, the average price for a distressed home sale was and the aver- age price for a nondistressed home sale was . The presence of distressed sales resulted in an overall average sales price for existing homes of more than 20 percent below the nondistressed average sales price. The rate of distressed sales has declined since 2012 but remains elevated, averaging 19 percent during Housing Market Trends Sales Market—Cook County Submarket Continued During the 12 months ending April 2016, the average sales price for a distressed home sale was and the average sales price for a nondistressed home sale was . The impact of distressed home sales is lessening, but the average sales price for all existing home sales, of is more than 3 per- cent below the nondistressed price (CoreLogic, Inc., with adjustments by the analyst). By comparison, the national rate of distressed sales as a percentage of all resales, which peaked at 34 percent during 2011, or 1 year before the submarket peak, was 10 percent of all resale homes during the 12 months ending April 2016, down from 13 percent during April 2015. Single-family homebuilding, as measured by the number of homes permitted, expanded 6 percent in the Cook County submarket during the 12 months ending May 2016, to 1,675 homes permitted (preliminary data). During the 3 years from 2009 through 2011, developers built fewer homes in response to the low level of new home sales and falling home prices in the submarket. Single- family home construction declined to record low levels, averaging 720 annually from 2009 through 2011, before beginning to gradually recover, to 1,325 annually from 2012 through 2014. Despite the nearly doubling rate of the number of homes permitted, the annual average of 1,325 homes permitted remains low by historic standards and reflects the soft market and developers’ caution regarding single-family homebuilding in this submarket. Condominium development and sales in the Chicago HMA are primarily concentrated in the Cook County sub- market, which accounted for nearly 80 percent of HMA condominium sales since 2010, up from 74 percent from 2005 through 2009 (Metrostudy, A Hanley Wood Company, with adjustments by the analyst). During the 12 months ending March 2016, condominium sales totaled 35,050 units sold, 7 percent more than the number sold during the previous 12 months, and the average sales price increased 1 percent, to . Condominium sales in the submarket averaged 42,000 units sold annually during 2006 and 2007, before falling to an average of 21,450 units sold annually from 2007 through 2012. Sales then rose to average 33,200 units sold annually during 2013 and 2014. Average sales prices for condominiums were from 2005 through 2009, declined to during 2010, and bottomed out at an average of during 2011 and 2012. Single-Family Homes Permitted in the Cook County Submarket, 2000 to Current Notes: Includes townhomes. Current includes data through May 2016. Sources: U.S. Census Bureau, Building Permits Survey; estimates by analyst Housing Market Trends Sales Market—Cook County Submarket Continued An estimated 550 single-family homes and townhomes and 520 condomini- ums are currently under construction in the submarket. Despite population growth since 2010 in the Downtown Area, condominium development has been relatively restrained after large properties like Trump Tower (486 units) and 235 Van Buren (714 units) sold out during 2014. During 2015, remaining for-sale inventory at the Museum Park Place development in the city’s Near South Side neighbor- hood sold out. Current new con- struction in and around downtown Chicago is primarily rental, although developers are beginning to propose smaller owner-occupied properties of 20 to 60 units. In the River North community area of the city of Chi- cago, Sedgwick at Locust is scheduled to begin occupancy in the fall of 2016. Sedgwick at Locust includes 45 new-construction condominium units, with two-bedroom units priced from approximately and three- bedroom units from approximately . At Grant Park within the Sheffield Square development by M/I Homes in Orland Park, Illinois, approximately 15 miles southwest of downtown Chicago, new construction townhomes start at . In this development, which is walkable to a Metra commuter train station, more than 90 percent of the 160 home sites are sold. During the next 3 years, demand is estimated for 11,250 new homes in the submarket, including an estimated 500 mobile homes (Table 1). The estimated 1,075 single-family homes, townhomes, and condominiums currently under construction and a portion of the 95,000 other vacant units in the submarket that may come back on the market will satisfy some of the demand. Demand is expected to be stronger during the second and third years of the 3-year forecast period, as the home sales market continues to recover. Demand is expected to be greatest for homes priced from to . Table 4 shows the estimated demand for new market-rate sales housing in the submarket by price range. Table 4. Estimated Demand for New Market-Rate Sales Housing in the Cook County Submarket During the Forecast Period Price Range ($) Units of Percent From To Demand of Total and higher Notes: The 1,075 homes currently under construction and a portion of the estimated 95,000 other vacant units in the submarket will likely satisfy some of the forecast demand. Demand for 500 mobile homes during the forecast period is excluded from this table. The forecast period is June 1, 2016, to June 1, 2019. Since 2010, the rental market has improved considerably, primarily because of the increasing population in the submarket and a shift in preference from homeowner- ship to renting. These factors have helped the rental market absorb an estimated 25,500 existing vacant and constructed rental units during the Housing Market Trends Sales Market—Cook County Submarket Continued


[User] Rental Vacancy Rates in the Cook County Submarket, 2000 to Current Note: The current date is June 1, 2016. Sources: 2000 and 2010—2000 Census and 2010 Census; current—estimates by analyst period. Rental households currently account for approximately 44 percent of all households in the submarket, up from 41.8 percent in April 2010. Single-family rental units currently comprise an estimated 15 percent of the rental stock compared with 9 percent in 2000. The effect of fore- closures and resulting stronger rental demand have prompted additional single-family home conversions into rental units. The apartment market in the sub market is slightly tight as of the first quarter of 2016, with a vacancy rate estimated at 4.1 percent, up from 3.7 percent during the first quarter of 2015 (MPF Research). Apartment market conditions were tight to slightly tight throughout the submarket, with vacancy rates ranging from a low of 2.8 percent in the MPF Research- defined Central Cook County market area (hereafter, area) to a high of 5.3 percent in the Streeterville/River North area, where nearly 1,500 new apartments were added to the supply during the past year. The average rent in the submarket was approximately $1,400 per month, more than 5 percent higher than the average rent a year ear- lier. The highest rent in the submarket was in the Streeterville/River North area, where rents averaged $2,130, nearly 6 percent higher than a year earlier. Concessions are currently being offered at fewer than 5 percent of properties in all MPF Research- defined areas except the North Cook County area, where 8 percent of units are offering concessions, equal to 1 month’s free rent with a 12-month lease (MPF Research). The Loop and the Streeterville/River North areas have the highest rents of all Cook County areas. Approximately 710 and 1,500 new, market-rate rental units entered the inventory during the past 12 months in The Loop and Streeterville/ River North areas, respectively. Responding to tight apartment market conditions in the submarket, developers have expanded multifamily construction, as measured by the number of units permitted. During the 12 months ending May 2016, the number of multifamily units permitted totaled 8,625, approximately 14 percent fewer than the 10,050 units permitted during the 12 months ending May 2015. Despite this decline during the past 12 months, the number of multifamily units per mitted has grown significantly since 2010, and the number of units permitted Housing Market Trends Rental Market—Cook County Submarket Continued Current From 2011 through 2014, the number of multi- family units permitted averaged 6,200 annually, with approximately 12 percent of those units being permitted for owner occupancy and 72 percent located in the city of Chicago. This pattern of multifamily permitting represents a change from permitting from 2000 through 2010, a period when multifamily units were more evenly distributed throughout Cook County and more units permitted were intended for owner occupancy. From 2000 through 2007, the number of multifamily units permitted in the submarket averaged 10,450 annually, with approximately 58 percent of all units permitted for owner occupancy and 54 percent of all units permitted in the city of Chicago. As the number of nonfarm payroll jobs decreased each year from 2008 through 2010, multifamily production declined as well. Permitting for multifamily developments averaged 2,600 units annually from 2008 through 2010, and the proportion of those units intended for owner occupancy fell to approximately 25 percent of the total and 87 percent were in the city of Chicago. This decline in condo- minium development also correlates with the increase in foreclosed and REO homes described previously in the Cook County submarket sales housing section. Because of the recent significant economic development and popula- tion growth in the Downtown Area of Chicago described earlier in this report, a higher proportion of multi family housing is being constructed there. Of the 6,200 units permitted annually in the Cook County submar ket from 2011 through 2014, approx imately 2,900 units each year, or 47 percent of the submarket total and 65 percent of the city of Chicago total, were permitted in the three neighbor- hoods that comprise the Downtown Area. An estimated 11,100 rental units are currently under construction in the submarket, accounting for 77 percent of all multifamily units under construction throughout the Chicago HMA. Of these 11,100 units, approx imately 8,400 are in the city of Chicago and 5,200 are in the Downtown area. Among properties currently in lease up, Wolf Point West apartments, in the River North community area began leasing 509 units in January 2016, with rents for studio, one-bedroom, and two-bedroom units starting from and $4,264, respectively. Wolf Point West also includes penthouse units, some with three bedrooms, at higher rent levels. As of April 2016, over 35 percent of the 509 units were leased at Wolf Point West. In Evanston, Illinois, north of Chicago in suburban Cook County, E2 Apartments opened in the spring of 2015 and recently reached sustaining occupancy. Multifamily Units Permitted in the Cook County Submarket, 2000 to Current Notes: Excludes townhomes. Current includes data through May 2016. Sources: U.S. Census Bureau, Building Permits Survey; estimates by analyst Housing Market Trends Rental Market—Cook County Submarket Continued At both properties, Wolf Point West and E2, rents have increased an average of approxi- mately 10 percent among all bedroom sizes since January 2016.

[Assistant] During the 3-year forecast period, demand is expected for 15,650 new market-rate rental units. The 11,100 units currently under construction will meet a significant amount of that demand (Table 1), including all the demand in the first 2 years of the forecast period. Given the number of units under construction, demand for additional rental housing is expected to be minimal during the second year and increase in the third year of the forecast period. Table 5 shows the estimated demand for new market- rate rental units in the submarket by rent and number of bedrooms.


[User] Estimates by analyst Sales Market—Northern Counties Submarket The sales housing market in the Northern Counties submarket is currently balanced, with an estimated vacancy rate of 1.7 percent, down from 2.2 percent in April 2010. Dur- ing May 2016, the unsold inventory in the submarket was 14,850 homes, approximately 13 percent fewer than a year earlier and nearly 40 percent less than in May 2010 (Yahoo!-Zillow Real Estate Network). The eco- nomic recovery in the HMA and the relatively low levels of single-family home construction have contributed to improving sales housing market conditions. A shift to rental tenure in the submarket, however, has lowered the homeownership rate to a current estimate of 73.0 percent, down from 75.5 percent in April 2010. During the 12 months ending April 2016, new home sales (including single-family homes, townhomes, and condominiums) declined from a year earlier, while existing home sales in- creased in the submarket. New home sales totaled 2,250 homes sold during the past year, 14 percent less than the 2,625 homes sold during the previous 12-month period. At the same time, the average new home sales price was approximately 8 percent higher than a year earlier and higher than the previous record of during 2008 (CoreLogic, Inc., with adjustments by the analyst). New home sales averaged 10,200 homes sold annually from 2000 through 2003, before increasing to an average of 12,000 homes sold during the Housing Market Trends Rental Market—Cook County Submarket Continued The combined period, from 2000 through 2006, coincided with net in-migration and annual population growth averag- ing 1.2 percent. The rate of popula- tion growth has declined to less than 1.0 percent annually since, however. The number of new homes sold in the submarket fell to 8,600 during 2007, a 24-percent decrease from 2006. From 2007, new home sales continued to drop for the next 4 years, to an aver- age of 1,525 new homes sold during 2011, representing decreases averag- ing 35 percent annually. This period of sharp declines in the number new homes sold coincided with falling nonfarm payrolls and continued even as the number of jobs stabilized and began increasing, in part, because of stringent mortgage underwriting requirements, including larger down payments. New construction home sales increased from 2011 through 2014 before the decline during the past 12 months, averaging and 2,575 homes sold during and 2014, respectively. The average sales price for a new home in the submarket increased steadily through 2008, declined for 3 years through 2011, and has increased since 2012. From 2001 through 2008, new home sales prices increased nearly 5 percent annually, to a peak of during 2008. From 2009 through 2011, average new home sales prices declines averaged nearly 6 percent annually, reaching a recent low of during 2011. Since bottoming out in 2011, new home sales prices have increased, averaging gains of 4 percent annually to the cur- rent average sales price of . During the 12 months ending April 2016, in the Northern Counties submarket, existing home sales increased 2 percent, to 40,250 homes sold, from 39,400 homes sold during the previous year. At the same time, the average sales price was percent higher than the price a year earlier. Existing home sales in the submarket were relatively stable during the early 2000s, averaging 61,250 homes sold annually from 2001 through 2005, before a 19-percent decline in sales, to 51,300 homes sold, during 2006. Sales declined 25 percent, to 38,450 homes sold during 2007. As economic conditions in the Chicago HMA weakened, existing home sales continued to decrease, averaging 25,550 homes sold annually during the 4-year period from 2008 through 2011, before beginning to increase. Existing home sales increased 30 percent, to 33,350 homes sold during 2012 and rose 24 percent during 2013, to 41,250 homes sold, before declin- ing 7 percent, to 38,450 homes sold during 2014. Average prices for existing home sales increased from during 2001 to the decade peak of during 2007, representing average increases of 6 percent annually. From 2008 through 2012, average sales prices declined, registering drops of 6 percent annually, to a low of during 2012. Since bottoming out in 2012, existing home sales prices have partially recovered, increasing 6 percent annually to the current average of . The impact of seriously delinquent loans and distressed home sales in the Northern Counties submarket has been significant since 2008, and negatively impacted existing home sales prices as occurred in the Cook County submarket. In April 2016, 2.7 percent of mortgage loans in the submarket were seriously delinquent (90 or more days delinquent or in Housing Market Trends Sales Market—Northern Counties Submarket Continued The percentage of distressed sales (REO and short sales), as a proportion of all existing sales in the submarket, was less than 5 percent until 2007, when it began to increase drastically, peaking at 38 percent during 2013. This peak of distressed sales ratio occurred later than the peak in the Cook County submarket. This late peak is due primarily to differences in economic and housing market conditions for owners in the two submarkets. In the Northern Counties submarket, the average household income was approximately 25 percent higher than in the Cook County submarket, on average, from 2007 to through 2014 American Community Survey, 1-year data). In addition, the number of owner households experi- encing cost burden, defined as paying more than 30 percent of household income for housing costs, is lower in the Northern Counties submarket than in the Cook County submarket. During 2013, an estimated 30 percent of owner households in the Northern Counties submarket reported cost- burden status compared with nearly 35 percent of owner households in the Cook County submarket reporting such hardship. After the economy contracted and reached its bottom during 2009, households in the North- ern Counties submarket were in better financial condition than households in the Cook County submarket, and, while overall able to delay foreclosure proceedings, were unable to avoid them. During 2013, when distressed home sales peaked in the Northern Counties submarket as a proportion of all exist- ing home sales, the average price for a distressed home sale was and the average price for a nondis- tressed home sale was . The presence of distressed sales resulted in an overall average sales price for existing homes of nearly 17 percent below the nondistressed aver- age sales price. The rate of distressed sales has declined since 2013 but remains elevated, averaging 17 percent during the 12 months ending April 2016, down from 22 percent a year earlier, and continues to depress resale home sales prices. During the 12 months ending April 2016, the aver- age sales price for a distressed home sale was and the average sales price for a nondistressed home sale was . The impact of distressed home sales is lessening, but the average sales price for all existing home sales was more than 2 percent below the nondistressed price (CoreLogic, Inc., with adjustments by the analyst). Single-family homebuilding, as measured by the number of homes permitted, during the 12 months ending May 2016, totaled 3,400 homes permitted, nearly 6 percent less than were permitted in the Northern Coun- ties submarket during the 12 months ending May 2015 (preliminary data). The number of homes permitted fell even further, averaging 1,925 homes permitted annually from 2009 through 2011, similar to levels in the Cook County submarket, before starting to recover. From 2012 through 2014, the number of single- family homes permitted increased to average 3,150 annually, which is greater than the homebuilding Housing Market Trends Sales Market—Northern Counties Submarket Continued An estimated 1,025 single-family homes and townhomes and 125 condominiums are currently under construction in the Northern Coun- ties submarket. At Ingham Park, in Aurora, Kane County, Illinois, 76 new single-family homes with four bedrooms are being marketed at sales prices from to . Nearly 90 percent of the homes were sold at the time of this analysis. In Hawthorn Woods, Lake County, Illinois, Hawthorn Hills Ranches lists 16 available homes and 27 sold, among a 76-homesite neighborhood, with the remaining 33 lots yet to enter the market. The single-family homes at Hawthorn Hills Ranches are 1,785 square feet and larger and are priced from to . During the next 3 years, demand is expected for 10,500 new homes in the submarket, including an estimated 500 mobile homes ( The current date is June 1, 2016. Multifamily Units Permitted in the Northern Counties Submarket, 2000 to Current Notes: Excludes townhomes. Current includes data through May 2016. Sources: U.S. Census Bureau, Building Permits Survey; estimates by analyst Housing Market Trends Rental Market—Northern Counties Submarket Continued Current When the number of multifamily units permitted increased during 2006, to 6,325, DuPage and Lake Counties each accounted for one-third of the annual total, and, during 2007, the number of multifam- ily units permitted increased heavily in DuPage County, where two-thirds of the development was located. From 2008 through 2014, when multifamily permitting was comparatively low, 35 percent of the units permitted were in Lake County, 30 percent were in DuPage County, and 15 percent each were in Kane and McHenry Counties. An estimated 2,400 multifamily units are currently under construction in the submarket. Metro 59 is currently under construction in Aurora, DuPage County, Illinois, and scheduled for occupancy in the fall of 2016. Metro 59 includes 460 apartment units, is walkable to a Metra train station, and includes rents starting at $1,290 for studio units, $1,495 for one-bedroom units, $2,120 for two-bedroom units, and $2,855 for three-bedroom units. In Deerfield, Lake County, Illinois, monthly rents at the 128-unit Wood- view Apartments start at $1,540 for a studio unit, $1,819 for a one-bedroom unit, and $2,394 for a two-bedroom unit.

[Assistant] During the 3-year forecast period, demand is expected for 2,650 new market-rate rental units (Table 1). The 2,400 units currently under construc- tion will satisfy most of the forecast demand. Demand for additional units beyond those already under construc- tion will be strongest during the third year of the forecast period. Table 7 shows the estimated demand for new market-rate rental units in the submar ket by rent and number of bedrooms.


[User] Estimates by analyst Sales Market—Southern Counties Submarket The sales housing market in the South ern Counties submarket is currently soft, with an estimated vacancy rate of 2.2 percent, above the 2.1-percent rate in April 2010. During May 2016, the unsold inventory in the submarket was 6,950 homes, nearly 12 percent less than a year earlier and 40 percent less than in May 2010 (Yahoo!-Zillow Real Estate Network). As in the other submarkets, the economic recovery and relatively low levels of single- family home construction in the submarket have aided the strengthen- ing of the sales housing market. The submarket has also registered a shift toward increased rental tenure. The current homeownership rate is estimated at 75.9 percent, down from 77.4 percent in April 2010, which, despite the decline since 2010, is the highest rate in the HMA. The number of new home sales in the submarket rose strongly, from 5,600 homes sold during 2001 to 12,800 homes sold during 2005, with growth averaging 23 percent annually. Beginning in 2006, new home sales in the submar- ket began to decline sharply, dropping an average of 32 percent annually, to 1,225 new homes sold during 2011. Since bottoming out in 2011, new home sales have increased, to the current total of 2,025 homes sold, which represents gains averaging 12 percent annually. The Southern Counties submarket is and has been a more affordable sub- market than either of the other two submarkets in the Chicago HMA. The current average sales price in the submarket for newly constructed homes is compared with for the Northern Counties submarket and for the Cook County submarket. Average sales prices for new homes in the Southern Counties submarket rose nearly 5 per- cent annually, from during 2001 to during 2007. Aver- age new home sales prices then fell an average of 7 percent annually to a recent low of during 2009. During 2010, average new home sales prices increased 5 percent, to . Average new home prices remained relatively stable, averaging during 2011 and during 2012, before increasing to the current average of which represents a 1-percent gain from a year earlier. Existing home sales in the Southern Counties submarket totaled 25,600 homes sold during the 12 months ending April 2016, 6 percent fewer sales than a year earlier. Regular, non distressed resale home sales, however, increased nearly 1 percent during the same time, and the decline during the past year was in distressed home sales. Existing home sales averaged 26,150 homes sold during 2001 and increased at an average annual rate of 11 percent to the peak of 40,250 homes sold during 2005. During 2006, average sales of existing homes began to decline, to 37,600 homes sold, a 7-percent drop, followed by a 23-percent contraction during 2007, to 28,900 homes sold. After existing sales declined a further 27 percent during 2008, total sales of existing homes then averaged 18,800 homes sold annually from 2009 through 2011. Sales began to increase during 2012, to 22,500 homes sold, or 23 percent more than during 2011. Since 2012, existing home sales have increased an average of 4 percent annually to the current total of 25,600 homes sold. The average existing home sales price peaked during 2006 and 2007, averag ing reflecting increases averaging 6 percent annually from the 2001 average sales price of . After that 2-year peak period and before the economy began to weaken during 2008, average sales prices declined 6 percent annually, to the re- cent low annual average of during 2011. Since 2011, average home sales prices have increased, to the current average of for the 12 months ending April 2016, up 10 percent from the previous 12 months. In April 2016, 3.7 percent of mortgage loans in the submarket were seriously delinquent (90 or more days delinquent or in foreclosure) or had transitioned into REO status, down from 4.9 percent a year earlier (CoreLogic, Inc.). The percentage of distressed sales (REO and short sales), as a proportion of all existing sales in the submarket, was less than 5 percent until 2007, when it began to increase substantially, peak- ing at 33 percent during 2012. When distressed home sales peaked during 2012 as a ratio of all existing home sales, the average price for a distressed home sale was and the aver- age price for a nondistressed home sale was . The presence of distressed sales resulted in an overall average sales price for existing homes of more than 10 percent below the nondistressed average sales price. The effect that distressed home sales have on average sales prices was evident but less substantial in the Southern Counties submarket than in the other two submarkets because of lower average resale prices overall in the Southern Counties submarket. The rate of distressed sales has declined since 2012 but remains elevated, averaging 19 percent during the 12 months ending April 2016, down from 24 percent a year earlier. During the 12 months ending April 2016, the average sales price for a distressed home sale was and the average sales price for a nondistressed home sale was . As in the other two submarkets, the impact of distressed home sales on resale home sales prices is lessening in the South- ern Counties submarket. The average sales price for all existing home sales was approximately 2 per- cent below the nondistressed price (CoreLogic, Inc., with adjustments by the analyst). Single-family homebuilding, as meas ured by the number of homes permit- ted, totaled 2,700 homes permitted in the Southern counties submarket during the 12 months ending May 2016, approximately 4 percent more than a year earlier (preliminary data). Single-family home permitting in the submarket followed a similar pattern reported in the other two submarkets in the Chicago HMA. From 2009 through 2011, levels of single- family home permitting were low, averaging 1,600 homes annually. As the number of new home sales began to increase during 2011, single-family permitting also increased, to 2,400 homes permitted annually, from 2012 through 2014. An estimated 850 single-family homes are currently under construction in the Southern Counties submarket. Single-Family Homes Permitted in the Southern Counties Submarket, 2000 to Current Notes: Includes townhomes. Current includes data through May 2016. Sources: U.S. Census Bureau, Building Permits Survey; estimates by analyst Housing Market Trends Sales Market—Southern Counties Submarket Continued In northwest Indiana, SummerTree, in Crown Point, Lake County, advertises 13 available home sites with 7 sold in a new neighborhood of single-family homes including three and four bedrooms and with prices ranging from to . During the next 3 years, demand is expected for 3,625 new homes in the submarket, including an estimated demand for 300 mobile homes (Table 1). The estimated 850 homes currently under construction and a portion of the 26,000 other vacant units in the submarket that may come back on the market will satisfy some of the demand. Demand is expected to be relatively stable throughout the 3-year forecast period, because the owner market was not as severely impacted in the Southern Counties submarket as in the other two submarkets in the HMA. Demand is expected to be greatest for homes priced from to . Table 8 shows the estimated demand for new market-rate sales housing in the submarket by price range.

[Assistant] Table 8. Estimated Demand for New Market-Rate Sales Housing in the Southern Counties Submarket During the Forecast Period Price Range ($) Units of Percent From To Demand of Total and higher 330 10.0 Notes: The 850 homes currently under construction and a portion of the estimated 26,000 other vacant units in the submarket will likely satisfy some of the forecast demand. Demand for 300 mobile homes during the forecast period is excluded from this table. The forecast period is June 1, 2016, to June 1, 2019. Approx imately 1,600 vacant and newly constructed rental units have been absorbed in the submarket since 2010.


[User] The HMA consists of Milwaukee, Ozaukee, Washington, and Waukesha Counties. Corporate head quarters for Harley-Davidson, Inc., Kohl’s Corporation, and Johnson Controls are located in the HMA. Summerfest, the world’s largest music festival, has been held on Milwaukee’s Lake Michigan lakefront each year since 1970 and has an economic impact of more than $200 million. Market Details Economic Conditions................ 2 Population and Households...... 6 Housing Market Trends............. 8 Data Profile............................. 12 Summary Economy Economic conditions in the Milwau- kee HMA continue to recover from the recent recession, with nonfarm payrolls increasing each year since 2011; job levels remain 2,300 jobs below the 2007 high and 15,800 jobs below the peak in 2000, however. Nonfarm payrolls averaged during the 12 months ending August 2016, up 7,100 jobs, or 0.8 percent, from the previous 12 months. The current unemployment rate is 4.7 percent, down from 5.2 percent a year ago and well below the 2010 peak of 8.9 percent.

[Assistant] During the 3-year forecast period, nonfarm payroll growth is expected to moderate to an average increase of 0.7 percent a year.


[User] Sales Market The current sales housing market in the HMA is balanced with a 1.6-percent vacancy rate, down from 1.9 percent during April 2010. New and existing home sales in the HMA totaled 24,450 homes sold during the 12 months end ing August 2016, an increase of 980, or 4 percent, from the previous 12 months (CoreLogic, Inc., with adjust- ments by analyst).

[Assistant] During the 3-year forecast period, demand is estimated for 5,375 new homes ( Estimates by analyst


[User] As of September 1, 2016, the HMA population is estimated at 1.58 million, an average gain of 3,275, or 0.2 percent, annually since 2010, slower than the average increase of 5,525, or 0.4 percent, annually from 2000 to 2010. Lower net out-migration, because of limited job growth in other metropolitan areas in the country during the late 2000s, contributed to higher population growth during the previous decade. Net natural increase (resident births minus resident deaths) was also higher during the previous decade. Since 2000, nearly all population gains have been attributed to net natural increase because of a net out-migration in the HMA every year except from 2008 to 2009 (U.S. Census Bureau population estimates as of July 1). During the national recession of the early 2000s, net out-migration was lower because of limited job opportu- nities elsewhere but, as job growth in other parts of the country accelerated during mid-2000s, out-migration from the HMA increased. From 2000 to 2003, the population rose by an average of 5,775, or 0.4 percent, annually, which was slowed by average net out-migration of 2,450 people each year. From 2003 to 2008, as employ- ment grew faster nationally, popula- tion growth fell to an average of 3,700 people, or 0.2 percent, annually, as net out-migration rose to average 5,125 annually. The nearby, larger metro- politan areas of Chicago and Min- neapolis, along with faster-growing metropolitan areas such as Madison and Phoenix, were common destina- tions for HMA residents from 2000 to 2008 (Internal Revenue Service, County-to-County Migration Data). As the national recession began in late 2007, HMA residents could move to few other places with improved employment opportunities. From 2008 to 2009, the HMA population increased by 11,400, or 0.7 percent, including net in-migration of 2,300 people, the largest overall annual population gain and the only year with net in-migration since before 2000. Population and Household Growth in the Milwaukee HMA,* 2000 to Forecast Population Households to to current Current to forecast Average annual change * Milwaukee-Waukesha-West Allis HMA. Notes: The current date is September 1, 2016. The forecast date is September 1, 2019. Components of Population Change in the Milwaukee HMA,* 2000 to Forecast – 2,000 – to to current Current to forecast Average annual change Net natural change Net migration * Milwaukee-Waukesha-West Allis HMA. Notes: The current date is September 1, 2016. The forecast date is September 1, 2019. Sources: 2000 and 2010—2000 Census and 2010 Census; current and forecast— estimates by analyst Net out-migration averaged 3,350 people annually, increasing in more recent years because recovery and job growth have been faster in other metropolitan areas around the country. The Chicago, Minneapolis, and Madison metropol itan areas continue to be common destinations for people leaving the HMA but, since 2009, the Dallas, Austin, and Houston, Texas metropoli- tan areas have increased in popularity for residents moving from the HMA. Within the HMA, population growth in downtown Milwaukee is outpacing growth for the area as a whole. From 2010 to 2014, downtown Milwaukee added an estimated 770 residents a year, or growth of approximately 2.5 percent, annually (analyst estimates). Since 2010, a surge in downtown housing construction and the reloca- tion of more than 46 companies into downtown from suburbia and areas outside the HMA contributed to a rising downtown population. Compa- nies relocating to the downtown area include a satellite office for Kohler Co., Jones Lang LaSalle, and Aecom/ URS from suburban parts of the HMA and Lohmann & Rauscher, a medical device manufacturing company, from Topeka, Kansas. No job counts were announced with the moves. During the next 3 years, population is expected to increase by an average of 4,000, or 0.3 percent, annually as expected job growth slows out- migration. The trend in household growth has been similar to that of population growth in that it has slowed from the previous decade. Household growth since 2010 has averaged 2,425 house holds, or 0.4 percent, annually compared with an average of 3,450 households, or 0.6 percent, a year from 2000 to 2010. As of September 2016, the HMA contains an estimated households, up from approximately in 2010 and in 2000. From 2000 to 2010, the homeowner- ship rate increased only slightly, from 61.1 percent in 2000 to 61.2 percent in 2010. The homeownership rate has declined since 2010 and is currently estimated at 58.2 percent. During the next 3 years, household growth is expected to remain rela- tively stable, increasing by 2,800, or 0.4 percent, annually. Existing home sales (including single-family homes, townhomes, and condominiums) in the HMA totaled 23,700 during the 12 months ending August 2016, up 1,025, or 5 percent, from the previous year, continuing a trend of increasing or stable sales that began during 2012 (CoreLogic, Inc., with adjustments by the analyst). Limited growth in sales is partially because of limited inventory. During August 2016, the 5.8 months of inventory was down from 7.0 months during August 2015 and 8.3 months during August 2014 (Greater Milwau- kee Association of Realtors®). Despite recent gains, existing sales are still below levels from 2003 through 2006, when an average of 31,550 homes sold each year, but above the average of 17,200 sales a year from 2007 through 2011. Sales increased 42 percent from 2011 to 2012 and then stabilized, averaging 21,450 annually from 2012 through 2015. Average sales prices for existing homes are increasing, up 2 percent to during the 12 months ending August 2016, continu- ing a trend of increasing prices that began in 2014. The average sales price for an existing home is up 16 percent, or $27,700, from the low of in 2009 but is 3 percent, or $6,200, below the 2007 peak of . Distressed sales—including real estate owned (REO) and short sales—comprised 13 percent of all existing sales during the past 12 months, down from a high of 24 percent during 2011. In August 2016, 2.5 percent of all mortgage loans in the HMA were 90 or more days delinquent, were in foreclosure, or had transitioned into REO status, down from the 3.1-percent rate in August 2015 and well below the peak of 6.2 percent in early 2010. New home sales remained stable during the past 12 months, at 740, but were down 20 percent compared with new home sales during 2012 and 2013. Recent housing construction has shifted more to apartments and to development in or near downtown Milwaukee, following business reloca tions and increased development of new retail and entertainment venues. The average sales price for a new home during the 12 months ending August 2016 was down 2 percent from a year earlier, and 5 percent, or $12,900, below the prerecessionary peak in 2007 of . New home sales prices declined at an average of 4 percent a year from 2008 through 2012. Despite the decline during the past 12 months, average sales prices were still up 17 percent, or $44,200 from the low of in 2012. During 2014 and 2015, new home prices rose an average of 10 percent a year, nearly three times faster than existing home prices, widening the gap between new and existing home sales prices from less than 15 percent during 2012 to more than 20 percent during 2015. Coincid- ing with slower population growth in the mid-2000s, followed by the reces- sion in the late 2000s, homebuilding declined by an average of 620 homes Permitting remained low from 2009 through 2011, averaging 920 homes annually. Home sales increased beginning in 2012, absorbing existing inventory, and permitting began to rise, increasing an average of 10 percent annually from 2012 through 2015. During the 12 months ending August 2016, approximately 1,600 single-family homes were permitted, up from 1,275 during the previous year (preliminary data). Continued job growth and a declining inventory of existing homes for sale are support- ing the rise in permitting.

[Assistant] Demand is expected for 5,375 new homes in the HMA during the next 3 years. The 600 homes currently under construction will meet part of the demand during the first year ( Estimates by analyst Housing Market Trends Sales Market Continued


[User] Despite continued job gains, tenure shift of foreclosed homes to the rental market and relatively slow population growth kept the overall rental market slightly soft. During 2015, single-family homes comprised 21 percent of all occupied rental housing units, up from 18 percent during and 2015 American Community Survey 1-year data). The remaining renter-occupied housing consisted of 33 percent in two- to four-unit buildings and 46 percent in five-or-more-unit buildings. Mobile homes accounted for less than 1 percent of rental housing. A portion of the shift from owner-occupied single-family housing to renter-occupied housing was because of a partnership between the city of Milwaukee and Gorman Co., Inc., which has rehabili- tated more than 300 foreclosed homes since 2010, shifting them to the rental market. Supporting an increase in rental demand is an increase in the number of out-of-state and international students at University of Wisconsin- Milwaukee (UW-M), up 7 percent, or an average of 200 students, a year since 2006. Student households are estimated to comprise fewer than 5 percent of all rental households in the HMA but are a larger share of renter households in and near downtown, where the two largest universities, UW-M and Marquette University, with a combined enroll- ment of 37,000, are located. The apartment market in the Milwau- kee HMA is tight, with an estimated vacancy rate of 1.9 percent as of the second quarter of 2016, down from 2.6 percent during the second quarter of 2015 (MPF Research). Vacancy rates in six of the seven MPF Research- defined market areas (hereafter, areas) declined, with vacancy rates in the second quarter of 2016 ranging from 1.4 percent in the South Suburban Franklin/Oak Creek area to 2.7 percent in the Far North Side area in northern Milwaukee County. Only one of the areas, the Washington/Ozaukee area, the most rural portion of the HMA, recorded an increase in vacancy rate, to 2.1 percent. The average monthly rent for the HMA during the second quarter of 2016 rose to $993, up 2 per cent from $974 a year earlier, continu ing a trend of rent increases each year since 2011. Average rents in six of the seven areas went up, with increases ranging from 1.6 to 2.8 percent, and declined in only one area, the Washington/Ozaukee area, where the average rent declined 1 percent. The average rent in the Downtown/ Shorewood area, the most expensive area, was $1,282, up 3 percent from a year ago, and the average rent in the least expensive area, the South Side/ West Allis/Greenfield area, is $827, up 2 percent from a year ago. Rental Vacancy Rates in the Milwaukee HMA,* 2000 to Current 2000 Current * Milwaukee-Waukesha-West Allis HMA. Note: The current date is September 1, 2016. During the 12 months ending August 2016, the number of multifamily units permitted rose 5 per- cent, to 2,200 units, up from 2,100 units during the previous 12 months (preliminary data; estimates by ana- lyst). Permitting averaged 3,275 units from 2000 through 2005 and then declined to an average of 1,700 units during 2006 and 2007. Permitting increased during 2008 to 2,900 units and then returned to lower levels from 2009 through 2013, averaging 1,775 units annually. Permitting increased by more than 1,000 units from 2013 to 2014, to a recent high of 2,825 in 2014, coinciding with an increase in availability of Wisconsin’s Historic Preservation Tax Credit, and then returned to previous levels, with 1,850 multifamily units permitted during 2015.

[Assistant] Although multifamily permitting in the HMA is still below levels from the early- and mid-2000s, more than $3 billion of public and private invest- ment since 2005 has contributed to an increase in multifamily construction in the downtown area of the city of Milwaukee. Residential development in and near downtown Milwaukee is supported by the cleanup and redevel opment of brownfield sites such as the former Beerline B railroad spur that served the Pabst, Blatz, and Schlitz breweries, the former Pabst Brewery site, and several former tannery sites along the Milwaukee River. Approximately 1,600 multifamily units have been constructed on the former brownfields, with most units built since 2010, and more than 1,000 additional units are currently under construction in the downtown area. River House Apartments, Phase I, a 243-unit apartment project located on a former brownfield site, is expected to open in December 2016. Studio apartments rent for $1,215 to $1,250, one-bedroom units rent for $1,475 to $1,525, two-bedroom units rent for $1,900 to $2,135, and three-bedroom units rent for $2,355. A second phase of the apartment project, with another 240 units, is also planned, but no groundbreaking date has been announced.


[User] During the 12 months ending June 2018, nonfarm payrolls averaged up 1.0 percent, or by 4,100 jobs, from the previous 12 months. The government sector, which is the largest payroll sector in the HMA, grew by 700 jobs, or 0.8 percent, during the past 12 months.

[Assistant] During the next 3 years, nonfarm payrolls are expected to increase an average of 1.2 percent annually. Sales Market Slightly tight, with a 4% home sales price increase during the 12 months ending June 2018 The home sales market is currently slightly tight, improving from slightly soft conditions in 2010. The sales vacancy rate is currently estimated at 1.1 percent, down from 2.0 percent in 2010. The average inventory of homes for sale increased to 3.9 months in June 2018, up from 3.5 months in June 2017. Most of the increase in inventory was for homes priced above . New and existing home sales rose to 13,350 during the 12 months ending June 2018, up 2 percent from the previous 12 months (Metrostudy, A Hanley Wood Company). During the 3-year forecast period, demand is estimated for 4,825 additional units. The 670 units under construction are expected to meet a portion of demand during the first year of the forecast. Rental Market Balanced, with an 11% decrease in rental unit permitting during the 12 months ending June 2018 Rental market conditions have transitioned from slightly soft in 2010 to currently balanced. The rental vacancy rate was 6.7 percent in 2010 and has fallen to an estimated 4.3 percent, currently. Renter households have increased at an average of 2.0 percent annually since 2010, faster than overall household growth, contributing to the decline in the vacancy rate. During the 3-year forecast period, demand is expected for 5,425 additional rental units. The 3,075 units currently under construction are expected to meet demand during the first year and a portion of the second year of the forecast. Units under construction as of July 1, 2018. The forecast period is July 1, 2018, to July 1, 2021. Source: Estimates by analyst 3-Year Housing Demand Forecast Sales Units Rental Units Madison HMA Total Demand Under Construction


[User] Primary Local Economic Factors Chosen as the state capitol in the 1830s and home of the flagship state university since the 1840s, Madison has been the center of state government and public university education in Wisconsin for more than 150 years. In 2015, UW, UW Health, and UW-affiliated startup companies had an economic impact of $15 billion statewide (University of Wisconsin), and the university spent more than $1.16 billion on research and development in 2016 (National Science Foundation). Current Conditions – Nonfarm payrolls (Past 12 months) Job growth during the 12 months ending June 2018 slowed compared with the 12 months ending June 2017. Nonfarm payrolls increased by 4,100 jobs, or 1.0 percent, during the past 12 months (Table 1), compared with growth of 5,300 jobs, or 1.4 percent, during the previous 12 months. Both goods-producing sectors added jobs during the past 12 months. The mining, logging, and construction sector rose by 700 jobs, or 4.3 percent. The $175 million Judge Doyle Square redevelopment project in downtown Madison broke ground in October 2017, contributing to the increase.

[Assistant] The first phase, a 562-stall underground parking garage, is expected to be complete in early 2019. Current Nonfarm Payroll Jobs in the Madison HMA, by Sector Table 1. 12-Month Average Nonfarm Payroll Jobs in the Madison HMA, by Sector 12 Months Ending June Months Ending June 2018 Absolute Change Percentage Change Total nonfarm payroll jobs Goods-Producing Sectors Mining, Logging, & Construction Manufacturing Service-Providing Sectors Wholesale & Retail Trade 55.5 55.1 – 0.4 – 0.6% Transportation & Utilities 9.6 9.6 0.0 0.0% Information 17.3 17.0 – 0.3 – 2.0% Financial Activities 23.7 23.4 – 0.2 – 1.0% Professional & Business Services Education & Health Services Leisure & Hospitality Other Services 20.5 20.4 – 0.1 – 0.5% Government Notes: Numbers may not add to totals because of rounding. Based on 12-month averages through June 2017 and June 2018. Numbers are in thousands.


[User] Job gains occurred despite the closure of an Oscar Meyer manufacturing facility during the fourth quarter of 2017, which employed 5,000 workers earlier in the 2010s. Payroll changes in the service-providing sectors were mixed, with four sectors increasing, one unchanged, and four decreasing. The leisure and hospitality sector led growth, with a gain of 1,400 jobs, or 3.7 percent. In 2016, visitor spending in Dane County increased 5.2 percent from the previous year, to $1.2 billion (Tourism Economics). The education and health services sector had the second largest gain, up 1,300 jobs, or 2.8 percent, continuing year-over-year expansion since 2012. The government sector, which lost jobs during 4 of the past 8 years, recovered some of the previous losses, adding 700 jobs, or 0.8 percent. The wholesale and retail trade sector had the largest loss, down 400 jobs, or 0.6 percent, as Bon-Ton, Toys “R” Us, Sam’s Club, and several local grocery stores closed. The current unemployment rate in the HMA is well below the 3.0-percent rate for the state of Wisconsin and the 4.1-percent rate for the nation. Historic Trends: Overview Nonfarm payrolls rose during 8 of the first 9 years of the 2000s. The effects of the Great Recession were relatively limited in the Madison HMA, with jobs declining only during 2009, down 8,100, or 2.2 percent, compared with 4.4-percent and 4.3-percent declines in the state of Wisconsin and the nation in 2009. Job growth returned in 2010, and payrolls exceeded pre-recessionary levels during 2012, recovering 3 years before the state of Wisconsin and 2 years before the nation. Recovery, which began in 2010, marked the transition from a period of slow and steady job growth concentrated in the service-providing sectors to a period of faster growth that gains in both the goods-producing and service-providing sectors supported. Since 2010, job growth in the HMA averaged 5,500 jobs, or 1.5 percent, annually, growing faster than the early to mid-2000s. 12-Month Average Unemployment Rates in the Madison HMA and the Nation Job gains were largest in the professional and businesses services sector, with an average increase of 1,200 jobs, or 3.5 percent, annually, accounting for 30 percent of jobs added in the service-providing sectors. Epic Systems, a healthcare records company and currently the largest private sector employer in the HMA (Table 2), expanded from $50 million in sales and 550 employees in 2000 to more than $500 million in sales and 3,000 employees in 2008, contributing to growth in the service-providing sectors. Offsetting job growth in the service-providing sectors, jobs in the goods- producing sectors declined by an average of 600 jobs, or 1.2 percent, annually, from 2001 through 2008, with losses concentrated in the manufacturing sector. The food manufacturing industry, which includes a portion of the 2 billion pounds of cheese produced annually, statewide, accounted for approximately one-half the jobs lost in the manufacturing sector in the HMA. The mining, logging, and construction sector increased by less than 100 jobs, or 0.1 percent, annually, because job gains in the early 2000s were offset by an average decline of 900 jobs, or 5.4 percent, annually from 2007 through 2008. Lower levels of homebuilding contributed to the decline. Historic Trends: 2009 The goods-producing sectors, which had been declining since the Great Recession began in 2007, were hardest hit, with a loss of 6,400 jobs, or 12.5 percent, comprising approximately 80 percent of job losses in the HMA during 2009. Layoffs and closures of manufacturing facilities included closure of the Land O’Lakes butter manufacturing facility, affecting 120 workers, and layoffs of nearly 400 workers at Sub-Zero Freezer Company, an appliance manufacturer. The goods-producing sectors continued to decline during 2010, down by 1,600 jobs, or 3.6 percent. The manufacturing sector, which had been declining since 2007, reached a low of 30,800 jobs in 2010, but has grown by an average of 500 jobs, or 1.5 percent, a year from 2011 through 2016. The mining, logging, and construction sector, which also had been declining since 2007, reached a low of 12,200 jobs in 2011, coinciding with a low in residential building permits. From 2012 through 2016, payrolls in the sector increased by an average of 900 jobs, or 6.2 percent, annually supported by increasing residential construction. Job growth occurred in nearly all service-providing sectors from 2010 through 2016, with an average increase of 5,000 jobs, or 1.5 percent, annually. The only service-providing sector to decline was the government sector, down by less than 100 jobs, or 0.2 percent, annually. The Wisconsin Budget Repair Bill (Wisconsin Act 10), which passed in 2011, contributed to the decline in the sector during the early 2010s, and layoffs at UW during the summer of 2015 further contributed to the decline. Expansion of companies in healthcare technology supported job growth during the current decade. Epic Systems has added more than 4,200 employees since 2010. Exact Sciences, a medical testing company, received FDA approval for their cancer screening test, Cologuard, in 2014, and has since added more than 750 jobs.

[Assistant] The company is expected to break ground on a new building in the UW Research Park later in 2018 that will support further job growth. Building on the high concentration of workers in the healthcare technology industry, companies in other information technology industries, including the video game industry, have expanded. The fastest growing sector from 2010 through 2016 was the information sector, increasing by 1,000 jobs, or 7.2 percent, annually. More than 50 software publishing firms, a portion of which are video game production companies, are in the HMA, and the firms have added an estimated 6,500 jobs during the current decade. Employment Forecast During the next 3 years, payrolls are expected to increase an average of 1.2 percent annually. Job growth is expected to continue, but at a slower pace compared with the rate of growth since 2010. Tight labor market conditions during the 3-year forecast period are expected to result in a relatively low unemployment rate. Additional job growth in both the goods-producing and the service-providing sectors is expected to contribute to payroll growth during the next 3 years. Three new UW buildings currently under construction; a chemistry lab, a renovation at the Babcock Hall dairy plant, and a new Meat Science lab are expected to attract students and research funding. Cellular Dynamics, a stem cell manufacturer, is currently building a new $40 million facility and expects to add 120 employees. Sub-Zero, the appliance manufacturer that laid off employees in the late 2000s, is expected to hire 300 employees and has already begun a $62 million expansion of an existing manufacturing facility.


[User] Population Trends Despite relatively steady in-migration during periods of job growth, population growth in the Madison HMA has slowed during the current decade because of a decline in net natural increase (resident births minus resident deaths). Population growth was lowest from 2009 to 2010, a period of payroll decline, partially because of lower net in-migration. Since 2010, population growth averaged 6,725, or 1.1 percent, annually ( Net natural change and net migration totals are average annual totals over the time period. Source: U.S. Census Bureau, Bureau of Labor and Statistics Household Quick Facts 2010 Current Forecast Households Average Annual Change Percentage Change 1.5% 1.2% 1.1% Note: Average annual changes and percentage changes are based on averages from 2000–to current, and current to forecast. Sources: 2000 and 2010–2000 Census and 2010 Census; current and forecast–estimates by analyst Population Quick Facts 2010 Current Forecast Population Average Annual Change Percentage Change 1.2% 1.1% 1.0% Table 3. Madison HMA Quick Facts total population in 2010 to 19 percent in 2016 and was the only age cohort to increase as a share of the total population during this period.

[Assistant] The rising share of older residents is expected to have contributed to the decline in net natural increase during the current decade.


[User] Enrollment increases typically account for less than 10 percent of net in-migration, annually, but during the recent recessionary period, enrollment growth accounted for nearly one-half of net in-migration. From 2009 to 2010, enrollment increased by nearly 500 students, or approximately 45 percent of net in-migration. Since 2010, enrollment has increased by an average of 240 students a year, or 7 percent of net in-migration. Migration Trends People moving into the Madison HMA are typically moving from a non- metropolitan area or from one of the three nearby major metropolitan areas; Milwaukee-Waukesha-West Allis, Chicago-Naperville-Elgin, and Minneapolis-St. Paul-Bloomington (Table 4). More people moved into the Madison HMA from non-metropolitan areas and from the nearby major metropolitan areas than moved out of the HMA to those areas. Net out-migration, with more HMA residents moving out than in, was greatest to the Tampa, Seattle, Austin, Denver, and San Jose metropolitan areas, which have a high concentration of jobs in high-tech industries or are popular retirement destinations. Population by Geography Within the Madison HMA, approximately 80 percent of the population resides in Dane County and 20 percent resides in the remaining three counties of the HMA. Population growth was concentrated in the downtown Madison neighborhood and in suburban portions of Dane County (Map 3), with population in census tracts in those areas increasing approximately 1 percent or more, annually (2007–2011 and 2012–2016 American Community Survey 5-year data). A relatively large share of housing construction occurred in these areas, with approximately one-third of all apartment units built since 2012 in the downtown Madison neighborhood and nearly one-half of all single-family homes were built in suburban portions of Dane County, where land close to most employment centers is available for development. In the parts of the HMA farthest from the city of Madison, population tends to be relatively unchanged or declining.

[Assistant] Population Forecast Population growth is expected to continue during the 3-year forecast period, but slower than the current rate. Low unemployment both in the Madison HMA and the nation are expected to contribute to fewer people moving to the HMA for jobs. The relatively large share of residents aged 60 and older is also expected to contribute to lower net natural increase, further slowing population growth. During the next 3 years, the population is expected to increase by an average of 6,450, or 1.0 percent, annually.


[User] Household Trends Similar to population growth, household growth has also slowed during the current decade. Since 2010, the number of households increased by an average of 3,075, or 1.2 percent, annually, down from an average increase of 3,500 households, or 1.5 percent, annually from 2000 to 2010. Since 2010, only one-third of additional Source: American Community Survey 5-year data 2011 and 2016 Map 3. Average Annual Population Change by Census Tract in the Madison HMA, 2011–2016

[Assistant] Household Forecast Household growth is expected to slow to an average of 3,050, or 1.1 percent, annually, partially because of the slowdown in population growth. Approximately one-half of the additional households are expected to be owner households, an increase from the proportion during the current period, but below the level during the 2000s.