Developer Jim Stanton on his renewed interest in the Downtown Minneapolis condo market, from Finance and Commerce:
Stanton estimated that there are about 300 new condos in various projects currently for sale across downtown Minneapolis — not counting units up for resale — a sign to him that it’s about time to build.
“We are out of bread and butter stuff, by that I mean stuff up to $375,000,” Stanton said of condo units remaining for sale in his other projects…
We’ve heard similar bottom calling sentiments from most major players in the downtown Minneapolis condo market – for sale inventory under $300-400K is dwindling, very few new projects are coming to market, etc. etc.
And, believe it or not, based on the reports we’ve recently reviewed, appraisers are seeing a good bit of price stability – mostly in the North Loop and Mill District – in the sub $300k price band.
“We got rid of all the DITs [developers in training]. If they didn’t wake up themselves, the bankers told them that they were out of business. So I’m kind of optimistic,” Stanton said.
We can’t disagree with his optimism entirely. However, like the developers who’ve been forced out by tighter lending standards, the "bread-and-butter" buyer for the sub $375K stuff – typically long on credit, good income, but short on cash – may find a very different financing environment by the time these units make it to market.
That’s because condo financing, already signifcantly tighter than in the height of the boom, is setting up to be the next shoe to drop, and we expect lending standards for condos to be get much tougher in 2009.
Tighter standards, should they materialize, will undercut demand for any new projects. We could be wrong on this, but consider yourselves warned.