2024 Year End Market Review & 2025 Preview
Dear Property Owners and Real Estate Investors,
I hope everything is well and that 2024 has been a prosperous year. This letter's purpose is to provide you an update on what has transpired in the Eau Claire rental market during the past year and a preview of what to expect in 2025.
2024 in Review:
While a few vendors delayed raising their rates, the inflationary trends from 2023 seem to have stabilized to a more normal level in 2024—at least within our industry in Eau Claire, Wisconsin, and the surrounding areas. According to a November 13, 2024 statement from the National Economic Advisor, Lael Brainderd, the Consumer Price Index over the past month was 2.6% WhiteHous.gov… . Despite our national debt going to over $36 trillion and climbing, this 2.6% seems real when compared with what we see at the gasoline stations, the grocery stores, and hopefully for my Christmas shopping too.
The good news for 2024 is that by keeping lease renewal rents reasonable, plus our stellar maintenance crew, our awesome Executive Property Managers, and Client Relations Specialists, many of our tenants renewed their leases. Evictions were again not an issue as well.
Many new construction housing projects have been completed increasing housing supply. Fair market rents have continued to decline. Zillow data supports what we see. Zillow published that the median rent for all property types in Eau Claire was $1,005 in December 2024, a decrease of $245 from December 2023 https://www.zillow.com/rental-manager/market-trends/eau-claire-wi/?utm_source=chatgpt.com .
The UWEC student renting continues to get more difficult as the property owners are always looking to get more bedrooms all while the university has had a steadily declining population. The peak population was in 2010 with 11,413 enrolled down to 9,605 in 2022 https://www.eauclairewi.gov/home/showpublisheddocument/44152/638373667621100000 . The 2024 enrollment according to Wikipedia is at 9,461 https://en.wikipedia.org/wiki/University_of_Wisconsin%E2%80%93Eau_Claire?utm_source=chatgpt.com . Flashback to 2010 we had all student rentals filled before Christmas for students to move in June 1 the following year. https://en.wikipedia.org/wiki/University_of_Wisconsin%E2%80%93Eau_Claire?utm_source=chatgpt.com . The student rental owners should not panic. Things cycle through. The UW system overall saw a 1.2% increase. https://apnews.com/article/university-wisconsin-uw-enrollment-08e3892b668b586fe71b5fd4f898a3f. Also, as UWEC continues to push its on-campus rents upwards, we can do the same with off-campus rents.
We have increased our marketing efforts to attract UWEC students. Traditionally we have relied on our email campaigns to fill our student units. This year we added a dedicated student page to our website: https://www.generalpropertymanagement.com/student-rentals-eau-claire including listings, blog, FAQs, loan calculator, and other helpful resources. The blog page is the key to students finding us first. The blog articles are created by the most common search engine results for Google as determined by AnswerThePublic.com https://answerthepublic.com/f14vta/searches . The blog is sent out on our social media posts. Weekly we track our ranking of the top six most common searches by a typical UWEC student looking for an apartment. Our blog articles now rank on page 1 of all six test searches with one being in the #1 spot and two in the #2 spot. We added text message marketing to attract students as well.
For those owners with adjustable rate mortgages, the bad news for 2024 is that many saw their interest rates adjust upwards. Through covid the prime lending rate was 3.25%. Entering 2024, the prime lending rate was 8.5% https://www.wsj.com/market-data/bonds/moneyrates, and remained high throughout much of the year until later when we saw some relaxation of interest rates. Increased expenses have many owners considering foregoing investing into remodeling and rehabilitation of their old properties beyond the essential day to day upkeep. With the local housing market being more competitive making rents flat and even decreasing, investing into remodeling and rehabilitation to attract and retain the best tenants is important, while this seems counterintuitive to increase expenses in times of diminishing incomes, re-investing makes sense.
Ahead to 2025:
Typically, I send out our year-end update earlier, but this year has been marked by significant uncertainty, making it challenging to predict what 2025 will bring. Now that the elections are behind us, we have a clearer picture of what to expect for the Eau Claire area rental real estate market. The new federal administration has outlined ambitious goals, including ending foreign wars and increasing government efficiency. While the outcomes remain uncertain, the vision has sparked optimism, motivating people to leave stagnation behind—whether that means moving out of their parents’ homes, pursuing higher education, relocating, or upgrading their living situations. These shifts are the positive news for 2025 because these shifts often lead to increased demand for rental housing.
Generally, 2025 rent increases will be slight, flat, or in some cases even less. We will see in-process construction apartment projects get completed, such as the Cannery District, which increases supply. As we go into winter the average rents will continue to be lower because people tend not to want to move during the winter, just as we see every winter so this should not be a surprise to us. Spring 2025 will be strong as people move after the winters pause on relocating. Another bright spot is that the people that are able to work from home will continue to move out of the larger metropolitan areas and into areas such as Eau Claire.
The student rental market is evolving. Today’s students often prioritize privacy, preferring to rent alone or with one roommate rather than sharing larger homes with multiple friends. This trend and lower enrollment is likely to increase vacancies in traditional student housing, with non-student renters filling many of those units. Additionally, the Historic Randall Park Neighborhood Association (HRPNA) continues to advocate for fewer student renters and more families. These factors may lead to an increase in subsidized renters moving into HRPN properties.
In 2025 expect more pro-tenant movement by our elected officials in their efforts to tackle homelessness and affordable housing. During the federal election campaigns, affordable housing was a prominent issue, with some narratives incorrectly attributing high rents to property owner price-gouging. While this rhetoric does not reflect market dynamics, where rents follow economic principles, it has nonetheless spurred efforts at state and local levels to create pro-tenant legislation.
At the state level, 20 pro-tenant bills were initiated this year (thankfully all failed), but three significant court cases had an impact. One court of appeals decision, now case law, stipulates that tenants under a void lease agreement are not required to pay rent for the void lease and even be entitled to a refund of any rent paid. We should expect more pro-tenant legislation in the future.
Locally, Joshua Miller has announced his re-election campaign for Eau Claire City Council. Miller, who has served since April 2022, is emphasizing housing affordability and homelessness in his platform https://www.weau.com/2024/12/01/joshua-miller-announced-re-election-campaign-eau-claire-city-council/ . These efforts align with broader trends and could result in policy changes affecting property owners.
Insurance companies claim to be losing money. When I discussed insurance increases with a local insurance agent, he said that he would not be at all surprised to see 20% annual increases for the next few years. Insurance companies are doing more property inspections sending the property owners fix-it lists or face policy cancellation. These surprise inspections can be expensive for property owners and they are time-consuming. Property owners will want to plan for them occurring.
We have observed a shift in resident behavior, requiring more management time of the properties they occupy. This shift has contributed to an increase in residents requesting early lease terminations (unilaterally of course), as well as a rise in prospective tenants applying for apartments beyond their financial means. Additionally, while difficult to quantify, we’ve noticed a growing number of residents receiving government housing assistance. This has led to increased administrative demands, including additional paperwork, mailed documentation, unit inspections, and frequent adjustments to our tracking of the rent paid by the resident versus the government as this assistance is tied to changes in resident’s income.
Operations:
For 2025 we remain focused on tenant retention to avoid creating a turnover. We are keeping responsive to our residents to avoid turnovers and associated costs. We remain committed to enhancing our digital presence through SEO-optimized blogs and video content to position ourselves ahead of the competition.
If you are looking to acquire new properties, divest, or reposition your portfolio please work with your Executive Property Manager. Our property managers are all licensed real estate agents. They are familiar with the recent National Association of Realtors (NAR) settlement requiring all real estate agents to have a signed WB-36 Buyer Agency Agreement prior to showing property listed for sale. We are members of the Realtors Association and have MLS access.
You will see some new faces too. We added Executive Property Managers Brett Hudspeth and Tonya Tidwell, Maintenance Technician, Chad P., and Client Support, March L. You can learn more about the best crew that has ever worked here at: https://www.generalpropertymanagement.com/about
Thank you very much for your continued trust and partnership. Despite market challenges, we are confident in our ability to manage your investments effectively, and grateful for the opportunity to work with you. We take seriously our commitment to keeping you informed. Please don’t hesitate to reach out with any questions. We look forward to serving you in 2025 and beyond.
Sincerely,
John A. Moss
President
