State of Lending: Local Leaders Describe a Market Under Pressure—and in Transition

From soaring housing costs to tighter credit and a surge in technology-driven opportunity, access to capital in La Crosse is being reshaped in real time. Local lenders, developers, and investors say the money is still flowing—but only to projects and people who can adapt. In a candid discussion on the state of lending, panelists reveal where the pressure points are, where opportunity remains, and what it will take for the region to keep growing in a changing economy.

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Access to capital remains one of the strongest signals of economic health, and in La Crosse, that signal is mixed but active. At a recent forum on the State of Lending and Access to Capital, local leaders from banking, housing, and venture investment offered a candid look at how higher interest rates, rising costs, and rapid technological change are reshaping who can borrow, what gets built, and how fast the region can grow.

“Lending shapes what gets built, who gets served, and how fast our community grows,” said Vicki Markussen, Executive Director of the La Crosse Area Development Corporation, as she opened the discussion. “The question today isn’t whether capital is available, but on what terms, for whom, and for what types of projects.”

Housing Costs Are Rising Faster Than Incomes

For households, the pressure is most acute in housing. Ken Brossman, Chief Lending Officer at Marine Credit Union, described what he called a “compounding effect” driven by higher home prices, higher interest rates, and sharply rising insurance costs.

“In 2021, the average home price in La Crosse County was about $229,000,” Brossman said. “Today it’s over $310,000. That’s great if you’re selling—but it’s incredibly challenging if you’re buying.”

Inventory is tight, particularly for first-time buyers. “Right now, there are just over 200 single-family homes listed in the entire county without an accepted offer,” he said. “Only three of those are under $150,000.”

At the same time, financing costs have doubled. “A few years ago, a lot of people locked in mortgages starting with a ‘2,’” Brossman said. “Now we’re talking six percent or higher.”

When all costs are added together—mortgage, taxes, and insurance—the difference is stark. “That same home that cost about $1,390 a month in 2021 now costs nearly $2,500,” he said. “Income hasn’t kept up with that.”

Marine Credit Union has responded by getting more creative. “We’re looking beyond the mortgage itself,” Brossman said. “Debt consolidation, budgeting help, and down-payment assistance grants—all of it is about mitigating risk while still helping people succeed.”

Businesses Are Adjusting, Not Retreating

On the commercial side, the tone was steadier. Tim Kotnour, President of State Bank Financial, said local businesses have proven adaptable despite higher rates and tighter conditions.

“These factors—interest rates, regulation, labor—have always been there,” Kotnour said. “What matters is management, and businesses here are very well managed.”

Rather than pulling back, banks are fine-tuning underwriting. “We don’t rewrite loan policies,” he explained. “We tweak the dial. We might require more cash-flow cushion or slightly lower leverage, especially now that loans written at three or four percent are repricing at six or seven.”

Even so, Kotnour said demand remains strong. “I’ve never worked with a business that didn’t want to grow,” he said. “They may pause, but then they’re asking: Who do we hire next? What do we invest in?”

Developers Face the ‘Missing Middle’

For housing developers, the math is increasingly difficult. Jeremy Novak, Vice President of Development at 360 Real Estate Solutions, said the biggest challenge lies with what he called the “missing middle.”

“These are households making roughly 70 to 110 percent of the area median income,” Novak said. “They don’t qualify for subsidies, but they can’t comfortably afford market-rate housing either.”

Higher interest rates have strained projects across the country. “In one case, our entire financial analysis got blown up when rates spiked in 2022,” Novak said. “We paused for more than a year.”

The path forward, he said, lies in collaboration and creativity. “The successful projects going forward are going to have strong public-private partnerships,” Novak said. “It’s cities and developers locking arms to meet real community needs.”

Design is also changing. “We’re seeing people live differently,” he said. “Thirty percent of households in La Crosse are single-occupancy. That changes how we design units.”

In response, the firm has introduced smaller, more flexible apartments. “We found ways to make a 350-square-foot unit live like 450 square feet,” Novak said. “That’s how you keep housing attainable.”

Venture Capital Sees Opportunity in Disruption

While traditional lending tightens, venture capital is operating in a different universe. Jonathan Horn, Managing Director of the Idea Fund, said fundraising for startups is at a decade-long low—but innovation has never been cheaper.

“It’s harder than ever to raise capital,” Horn said. “But it’s also cheaper than ever to build a company.”

Horn emphasized that most venture capital historically flows to the coasts. “About 80 percent goes to California, New York, and Boston,” he said. “But the industries that make up over 60 percent of U.S. GDP—manufacturing, healthcare, agriculture—are right here.”

The difference now is technology. “The tools coming out of this generational investment are unbelievable,” Horn said. “You can build solutions faster and cheaper than ever before.”

Risk remains central to the model. “If you invest in 10 startups, five or six will fail completely,” Horn said. “You make your return on one or two big winners.”

Still, he believes the opportunity is enormous. “This is a turning point,” Horn said. “The companies that embrace this technology will be dramatically more productive. The ones that don’t will fall behind.”

Office Space, AI, and What’s Next

When asked about the growing risk around office buildings, Novak was blunt. “Converting office to residential is extremely challenging,” he said. “Zoning, building codes, infrastructure—none of it lines up. The cost often exceeds the return.”

Others pointed to growth as the long-term solution. “Every big business was once a small business,” Horn said. “If we grow companies here, office problems solve themselves.”

Looking ahead, panelists were cautiously optimistic. Kotnour pointed to economic forecasts calling for a strong 2026. Novak said developers are positioning projects now to stabilize in the coming years.

Artificial intelligence surfaced repeatedly as a looming force. “For a bank our size, AI will likely allow us to not fill two positions,” Kotnour said. “That’s productivity.”

Markussen closed by tying the conversation together. “Access to capital is about more than money,” she said. “It’s about risk, innovation, and whether we’re willing to adapt.”

In La Crosse, that adaptation is already underway.