Case-Schiller: Twin Cities Home Prices Down 13.8%

 
Standard & Poors has released the August 08 print of the Case-Schiller Home Price Index.  We pulled the graphic above to highlight what's happening in Minneapolis/St. Paul.

Click the graphic to make it bigger, or take our word that the average home price in the Twin Cities for August 2008 was 13.8% lower than August 2007. 

Though prices continue to slip, Teresa Boardman points out that (unlike last year) the market is slowly  moving in the right direction - toward price stability:

Teresa elaborates on the chart above:

"As the lines get closer to each other the supply of homes and the demand will be more balanced and theoretically home prices will stabilize. Last year the number of homes on the market went way up.  Supply and demand were out of balance because while listings were going up, sales were going down.  This year the inventory has been slowly decreasing all year."

10/28/08 at 09:44 AM Permalink | Comments (1) | TrackBack (0)
Filed Under: Banking Bailout, Blind Item, Case-Schiller Home Price Index, Market Stats, Minneapolis, Reports & Research, St. Paul

Developer Sees Promise in Downtown Minneapolis Condo Market

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.

There's more:

“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.

09/09/08 at 01:16 PM Permalink | Comments (1) | TrackBack (0)
Filed Under: Condos & New Developments, Downtown, Minneapolis

All Real Estate Is Local: Best and Worst Zip Codes

Felix Salmon has up a great little graphic (via Jake at Econompic Data) based on a Businessweek comparison of the best and worst performing zip codes in major metropolitan areas.

A very simple way of pressing home the point that despite the general negativity in the real estate market, some areas continue to appreciate, (and these areas tend to be of the long established and higher-priced ilk.)

In the Twin Cities, North Oaks nabbed the top spot, marking 15% appreciation.  South Minneapolis's 55409 (basically the Kingield neighborhood and other areas east of Uptown near 35W) zip code saw a 24% drop.

08/04/08 at 10:54 AM Permalink | Comments (0) | TrackBack (0)
Filed Under: Market Stats, Minneapolis, Reports & Research, Twin Cities

Foreclosures: Heating Up in the West Metro

Graphic via Strib

Steve Brandt at the Star Tribune with an interesting find:

Foreclosure data for the first half of 2008 show that the number of sheriff's sales jumped 59 percent in suburban Hennepin, compared with the same period last year.

But the number of sales is up only 20 percent so far this year in Minneapolis, and there are indications they are leveling off on the North Side, which has been the epicenter of the state's foreclosure crisis.

Pure speculation on our part, but it seems that many of the foreclosures in Minneapolis, and especially North Minneapolis were of the more toxic variety, and simply went bad more quickly.

There was fraud in the burbs, to be sure, but the declining real estate market will take its toll, resulting in more "natural" foreclosures (job loss, divorce, speculation) in addition to those of the shady and toxic strain. It may simply take longer for the foreclosure numbers to build in these areas.

07/31/08 at 05:46 AM Permalink | Comments (0) | TrackBack (0)
Filed Under: Foreclosures, Minneapolis, Twin Cities, Western Burb's

North Loop Condo Pipeline Drying Up

Finance and Commerce reports on the status of Downtown Minneapolis' North Loop Condo Pipeline (Pipeline = industry-speak for planned and in-process projects):

The new, under-construction Twins stadium has been touted as a catalyst for new development. But so far, new development has been slow to take off in North Loop.

The previous wave of residential condo development has largely ground to a halt. And amid the bumpy economy, there isn’t much fresh development in the current pipeline around the ballpark, slated to open in the spring of 2010.

From the perspective of a developer, this not only bad news, but a sign of the times. It is simply too costly, too risky, or both, to launch any new projects right now.

And after the onset of the credit crunch last summer, just as for individual homeowners, financing new projects got tough:

right after late August [or] Labor Day, it was literally like a switch had been flipped and that market evaporated,” Minn said.

lenders making loans backed by commercial mortgage-backed securities (CMBS) loans drove much of commercial real estate financing in recent years, until the credit crunch hit last fall.

For the individual homeowners - mostly condo dwellers - in North Loop, this can be taken as a positive sign.  Though there is still some inventory overhang from completed projects with unsold units, and financing a condo has gotten markedly tougher, new supply will soon be limited to re-sales only, and should provide some pricing support and enhance their prospects for appreciation, even if a few years away.

05/28/08 at 10:07 AM Permalink | Comments (4) | TrackBack (0)
Filed Under: Condos & New Developments, Downtown, Minneapolis

Case Schiller Says: Twin Cities Market Still Contracting

No surprise here, as the S&P/Case Schiller Home Price Index shows the continuing unwind of our local real estate market.  Median sales prices for March (year-over-year) were down 14.1%, in near lock-step with the reported national average of 14.4%.

Bloomberg reports the most useful summary, which can be applied to our market, and nearly all others:

"There is excess supply, weakening demand, prices are falling and will continue to fall,'' said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. "Housing sales are still trending lower.''

We'd only add that demand in many quarters is not so much weakening as it is being curtailed by tighter lending standards and those that can't sell their current home (at a loss) to enter the market as buyers.

05/27/08 at 01:52 PM Permalink | Comments (3) | TrackBack (0)
Filed Under: Market Stats, Minneapolis, Reports & Research, Twin Cities

The Mess at Sexton: More Details

Front and center in the business section today is a massive version of the photo above, via Star Tribune.

Accompanied by an article with more detail on the ongoing saga down at the Sexton, where only 36 of 123 units are occupied, and the entire project is a messy tapestry of fraud, foreclosure, and lawsuits.

"[The Sexton] doesn't come up in conversations very often, but when it does, the comment usually is something like 'That place is really a mess,'" Melchior said.

We'd expect to see some indictments for some of the principal actors soon, and one wonders whether the Sexton Building will be given similar treatment as the TJ Waconia, and is being set up for city administration/ownership/receivorship.
Sexton Building: That Place is a Mess [Strib]

04/28/08 at 03:50 PM Permalink | Comments (2) | TrackBack (0)
Filed Under: Condos & New Developments, Downtown, Foreclosures, Fraud, Minneapolis

Around the Horn: Local Blogs on the Twin Cities RE Market

Wanted to take a moment to hoist up a few posts from Twin Cities real estate blogs that caught our eye (in other news: Pending Home Sales are Down 22% yoy nationally)

Teresa Boardman publishes the tough-to-get-at numbers nobody wants published:

[U]sing data from our RMLS which is deemed reliable but not guaranteed I come up with 2223 single family homes, condos, and town homes currently on the market in St. Paul.  Of the 2223, 667, or 30% of them are in some stage of foreclosure.

There is no special category for short sales or foreclosure listings in the MLS...To get the data out of our MLS system I had to read both the agent comments and public comments on every single one of the 2223 listings....

Jeff Allen, research director for MAAR, notes a divergent trend in inventory at certain price points:

If you compare the number of homes for sale today with the same time a year ago, five of the eight price ranges we track actually have less on the market. Only the three price ranges under $190,000 have more on the market now than they did a year ago. Home sellers who are priced at $190,000 or above actually have less competition for buyers this year than they did last year.

Ross Kaplan at the City Lakes Real Estate Blog unpacks the marked decline in newspaper advertising:

My (extremely prominent) ad is the only ad running in the local city section. This despite the fact that there now exactly 364 other residential properties for sale in St. Louis Park.

This is no doubt a commentary on the decline of newspaper advertising; last year, Edina Realty decided -- correctly I believe -- to drop its Star Trib ad page to focus on its own branded Web site. However, it's also a testament to the state of the market. Early April is usually the height of the Spring market in the Twin Cities. In previous years, one would have expected to see 15-20 ads, minimum, where my solitary ad appeared.

Clearly, realtors are pulling back on their marketing budgets.

04/08/08 at 09:48 AM Permalink | Comments (1) | TrackBack (0)
Filed Under: Foreclosures, Market Stats, Minneapolis, St. Paul, Twin Cities

Pawlenty May Veto Foreclosure Moratorium Bill

From the Star-Tribune, reporting that governor Pawlenty will "probably" veto the Foreclsoure Moratorium bill currently winding it's way through the State Legislature:

Pawlenty said he is concerned about the potential effect on credit for the entire Minnesota mortgage market.

"Even though the concept is well-intentioned, it could have some pretty significant unintended consequences for the 98 percent of the credit market that are not in foreclosure," the GOP governor said.

For those unable to read between the lines here, what the Governor is getting at is this:  If Minnesota is going to pass legislation that invalidates a lender's contractual right to foreclose, these same lenders might not be so eager to issue mortgages around here, or at the very least may charge some Minnesota borrowers a premium - call it a Legislative Risk Adjustment - in the future.

To be fair, the moratorium targets owner occupant, sub-prime borrowers, so it remains to be seen whether a bill like this will meaningfully impact the pricing and/or costs for the "other 98%" of borrowers, but it is a real risk.

Also, the proposed moratorium may have costs beyond "higher future rates."  That's because interest, penalties, and tax bills continue to accrue, and are not forgiven (only deferred) under this bill.  The borrowers are still on the hook after the moratorium expires - and precious few will be able to pay then what they can't pay now.

The end result is after the moratorium expires, the lender and/or the borrower will be stuck with an even larger loss.  That may well have costs for us all in the form of a direct taxpayer bailout, of some form or another, at the State or Federal level.

In that sense, what's being billed as a "solution," just isn't. All we are really doing is deciding who to foreclose on now, who to foreclose on later, and increasing the cost of the end game.
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Proposed Freeze on Foreclosures Runs Into Obstacle [Strib]
Previous Coverage of this topic at BTM:
MN May Pass Nations Strongest Foreclosure Moratorium [BTM]
More on Foreclosure Moratorium [BTM]

04/03/08 at 10:00 AM Permalink | Comments (1) | TrackBack (0)
Filed Under: Foreclosures, Housing Market Politics, Minneapolis, Sub-Prime

TJ Waconia: Sued by Three Minneapolis Neighborhoods

As we await a likely Federal Indictment for the principals of TJ Waconia, they are also being sued by three Minneapolis Neighborhoods:

...the lawsuit alleges that T J Waconia dealt fraudulently, causing widespread foreclosures in the three neighborhoods. It alleges that the vacant housing has hurt property values and increased crime.

Council members have said that the firm bought and resold properties in a concentrated area of the North Side, allowing its sales prices to be used as comparable sales for appraisals on additional transactions.

The city has already taken an unprecedented action to strip the rental licenses of 45 properties associated with transactions by the firm. It plans to revoke as many as 100 more.

There are also more than a few private parties who have filed and won lawsuits against TJ Waconia, so essentially everyone is racing to lay legal claim to damages owed by these operators before the Federal Indictments come down.  We expect their will be more claims than assets when it is all said and done.
Firm Linked to Northside Foreclosures Faces Lawsuit [Star-Tribune]

04/02/08 at 10:07 AM Permalink | Comments (0) | TrackBack (0)
Filed Under: Foreclosures, Fraud, Minneapolis, Real Estate Law