Governments start taking steps to allow more construction, but policies at many levels add up to make land scarce and costly
The Madison area has the most expensive homes in Wisconsin — the median single-family home price in the metro area topped $490,000 in the second quarter of 2026, according to the National Association of Realtors.
That puts Madison among the 50 costliest metros nationwide, worse than Milwaukee (about $467,000) and Green Bay (around $370,000).
Yet most of Dane County remains farmland, grassland, or other open land that would seem to be an obvious place for single-family homes in a county that’s grown by more than 100,000 people since 2010. Experts project Dane County’s population, 600,000, could grow by 150,000 to 275,000 people by 2050: Can homes be built for them?
The area has made strides in allowing denser forms of development, say experts and development professionals, but single-family homes are more of a struggle — not just because it’s expensive to acquire and build on undeveloped land, but also because policies stand in the way.
Policymakers have developed a new enthusiasm for multifamily housing but still have a soft spot for farmland preservation and qualms about sprawl. They work in a political environment where developers make a convenient target, and where some localities’ bureaucrats are especially resistant to new housing.
“The bureaucracy is the number one impediment. It adds huge costs,” said Terrence Wall, a developer who’s been drawing attention to the obstacles his profession faces.
Costs at every level
It helps to distinguish two different ways to build. One is to develop new areas at the outskirts, often on formerly agricultural land; the other is to redevelop or build on vacant lots in already-developed areas.
Converting farms to homes isn’t as simple as buying land. Such development is expensive, numerous policies aim to preserve farmland even when it’s more economically valuable as houses, and developing new areas requires getting them annexed into a municipality.
“Greenfield development takes a lot longer, and it’s more expensive, than, let’s say, building an apartment building on an infill site. You’re trying to find farmland to buy and then get it annexed into a city, get it rezoned and approved, and then be able to put in all the public infrastructure,” said Robert Procter, government affairs director for the Realtors Association of South Central Wisconsin. “It’s a process.”
“For the houses themselves, all the materials have become vastly more expensive,” said Bill Connors, the executive director of Smart Growth Greater Madison, a developer-led housing-policy group. “Labor has become vastly more expensive. And the price of that undeveloped farmland has been skyrocketing.”
The first obstacle is that farmers have incentives not to sell, including tax credits for preserving farmland and agreements with the state to maintain farmland for 10 years at a time, the early termination of which comes with a hefty fee: For agreements made since July 2009, the Department of Revenue summarizes the penalty as “3 times the per acre value, times the number of acres being terminated or released from the agreement … of the highest value category of tillable cropland in the city, village, or town in which the land is located.”
However, some farmers are open to selling. “Maybe they don’t have any kids who want to take over the farm and they’re willing to sell,” Connors said. But municipalities can’t know in advance which farmers will decide to sell when — and those plans may not sync up with municipalities’ “comprehensive plans” meant to designate areas open to development.
“They’re saying, ‘In the next 10 years, these are the large parcels where we think development should happen, and these other parcels out farther, those should be in the 10- to 20-year range, and these other farms out farther should be in the 20-to-30 range,’” Connors said. “The problem is, if none of the farmers in the first 10-year range want to sell, there’s no land for new subdivisions.”
Chad M. Lawler, executive director of the Madison Area Builders Association, noted that while municipalities can later redo their plans to address such issues, his group would like to see more land included to begin with.
Plans’ boundaries create winners and losers among potential sellers. “If you’re in the comprehensive plan, then your land is worth a lot,” he said. “And then the guy or the family across the street who’s not in the comprehensive plan, their land can only be sold at agricultural prices.”
Scarce land is expensive land. Lawler pointed out that quarter-acre lots can sometimes go for $250,000 to $300,000, figures close to what some communities would like to see as the “all-in” cost of a home. Kurt Paulsen, a professor of urban planning at the University of Wisconsin-Madison, said that while a place like Whitewater can offer starter homes in the vicinity of $350,000, it would take six-figure subsidies to make that work in Dane County.
Jurisdictions that the land would be annexed from can also gum up the process. “A number of these town governments want very restricted development, or very little development, in the areas they currently control, and as town governments, they have a very limited ability to prevent annexations from happening,” Connors said. “Their solution, increasingly, is to incorporate into villages themselves and then mark very little of the new village available for development.”
The struggle to build single-family homes near Madison isn’t a simple story of one misguided policy restraining development, but a complicated one involving layers of obstacles, practical and political. As Procter put it, “Affordability dies a death of 1,000 cuts.”
“It’s not as if, if you suddenly change the zoning, you would get a large amount of development on formerly agricultural land. The constraint is also the ability to annex those lands, put them into the city or the village, and then extend water and sewer,” Paulsen said. “I would say that actually, Dane County has been doing a good job on the balance, in the sense that as cities and villages grow, they annex a little bit of land, extend water and sewer, and then let the housing development in those areas be at much higher densities than you would see in other suburban areas.”
The growing mismatch between the supply and demand of homes has consequences. Paulsen pointed to the relationship between a failure to build and rising prices, as illustrated in the nearby graph based on data he provided to the Badger Institute. He also noted a “spillover effect” in which people live farther away to avoid high prices in Dane County, citing census data showing there are about 100,000 workers with jobs in the county who live elsewhere. And he pointed out that when potential homebuyers can’t find a house they can afford, they may stay in the rental market, competing for housing there instead.
Higher up the income ladder, would-be buyers of big, expensive homes compete with everyone else. “A lot of individuals who could afford a more expensive house are unable to find one,” Lawler says. “They’re the ones offering fifty or sixty thousand dollars over asking and paying cash, because to them, it’s very affordable. But then that’s eliminating the individuals who really need that more affordable, starter-level housing.”
Density and barriers
While building single-family homes on undeveloped land is a challenge in the Madison area, there’s been progress on other margins. Nationwide, politicians across the political spectrum — from free-market conservatives to “YIMBYs” (pro-housing activists who say “yes in my backyard”) to “abundance” liberals — have been recognizing that the solution to high prices is more supply.
“I’ve been doing this for 10 years, and more and more municipalities agree with the policy points we’ve been making,” Lawler says. “Previously, there was pushback, where people thought it was just developers and builders looking to put one over on the municipality. But that’s not really what it was then, and it certainly isn’t now. We hear from a lot of elected officials and staff that the same talking points that we’ve had for a while are now the talking points of the community.”
Every level of government has gotten in on the action. The City of Madison has its Housing Forward plan, which includes both subsidies and the liberalization of zoning laws; its Housing Tracker reports more than 4,300 homes completed since the beginning of 2025 and almost 4,800 more under construction. The city faces special limitations, though, that steer its efforts toward apartments. “They’re getting boxed in by other municipalities,” Procter noted. “They don’t have a lot of farmland or greenfields to convert to single-family lots.”
Meanwhile, Dane County has created a Regional Housing Strategy strongly encouraging its municipalities to allow denser forms of development, reduce parking requirements, and much else. And recent changes to state law will mandate “Truth in Planning” — which, in some cases, will require villages and cities to rezone properties when the owner’s desired use is consistent with the municipality’s comprehensive plan.
These assorted policy efforts often take the form of allowing greater density rather than facilitating suburban development sometimes derided as “sprawl,” which means an easier time for multifamily housing.
Paulsen sees a result in the Madison-area rental market. “Rents have been stable to flat for the last couple of years,” he said. “We’ve almost reached a point where they won’t really go down too much below the equilibrium level where they are now.”
Density can help would-be owners, too. “You can accommodate a lot more housing units as attached townhouses than you can if you require a seven- or 10,000-square-foot minimum lot size,” Paulsen said.
But even when new zoning allows development, there’s still plenty of bureaucracy to wade through. A lot hinges on whether a municipality’s leaders and staff really want development.
“There are what I call ‘fast-track’ cities and ‘forever no’ cities. The fast-track cities, like Oshkosh, Neenah, and others, they will actually get your approvals for you — I don’t even have to show up to the zoning hearing,” Wall said. “With ‘forever no’ cities — like Madison, Watertown, Middleton — the biggest obstacle is the time it takes. They’ve put in place so much bureaucracy, so many departments.” Such delays add “carrying costs,” he said: “If I’ve got a loan on the land, I’m paying interest on that. If I’ve got investors, they’re going to need to get a return during that time.”
Wall lists a plethora of other factors driving up costs — fees, taxes, rapidly expiring permits, and burdensome health and environmental regulations. A 2020 change to Madison law even required “bird glass,” or windows with dots embedded to stop birds from flying into them, on certain large buildings.
It adds up to a race against time as more people flood into an already-expensive Madison market.
“Madison has been permitting a lot of housing. That’s been keeping things from getting worse — and maybe actually getting to the point where it’s starting to clear away some of that back deficit,” Connors said. “But they have to keep going, and all the other communities in the Madison area need to keep going in terms of production, to not start backsliding again.”
Robert VerBruggen is a senior fellow at the Manhattan Institute. He lives in Hobart, Wis.
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