YOUR GUIDE TO THE TWIN CITIES
Wednesday May 23, 2012
Just Listed brings you the latest news and information from the Twin Cities-area commercial and residential real estate market and beyond from veteran reporters Jim Buchta and Janet Moore.
Home sales and prices up in Minnesota and across the country during April
Posted by: Jim Buchta under Buying Updated: May 22, 2012 - 10:34 AM
The state and national home sales reports for April are out this morning. Nationally sales were up 3.4 percent with the median prices rising 10.1 percent. In Minnesota sales increased 0.3 percent with sale prices up 11.5 percent.
Both reports mirror what the Star Tribune has already reported for the Twin Cities metro. In all three reports prices were up primarily because of a decline in the number of distressed sales, which caused the statistical shift in the median sales price. That means there were fewer houses sold at fire-sale prices and that there were more traditional deals, which tend to sell for higher prices.
Long-term that’s good news because it means better comparable sales for those underwater borrowers and other eager sellers who are waiting for prices to rise.
Here's a summary for April home sales
- U.S. sales were up 3.4 percent to a 4.62 million-unit pace, with the median prices up 10.1 percent to $178,000.
- Minnesota sales were up 0.3 percent with sale prices up 11.5 percent to $145,000.
U.S. Bank and a unit of Zeller Realty haved closed on the refinance of LaSalle Plaza in downtown Minneapolis.
Terms were not disclosed.
The 21-year-old LaSalle Plaza, probably best known as the home of Crave restaurant, is located between LaSalle Avenue and Hennepin Avenue. The 30-story office building spans about 600,000 square feet and is home to various law, financial management, architectrual and boutique advisory firms.
U.S. Bank said in a news release the refinance will allow Chicago-based Zeller to reduce borrowing costs, reinvest in the property and complete leasing and construction of some vacant space.
Darlene Acker, Zeller's senior vice president-finance, said in a statement the firm is pleased to open a "new relationship with U.S. Bank. . . .They quoted the transaction quickly and delivered this loan to us as quoted."
Patty Gnetz, U.S. Bank's senior vice president of commercial real estate, said the Minneapolis-based bank is "committed to investing in the community and the downtown core."
Janet Moore covers commercial real estate for the Star Tribune.
Mortgage rates fell to new lows this week, according to several national surveys, pushing housing affordability levels to near-record highs. Freddie Mac's weekly national survey said that the 30-year fixed-rate mortgage averaged 3.79 percent for the week ending May 17, down slightly from 3.83 percent the previous week. The 15-year fixed-rate mortgage was down, too, falling to 3.04 percent. Bankrate.com, which surveys the top 10 banks and thrifts in the nation's biggest markets, also reported record-low rates, saying the new low was the fourth consecutive record.
Rates are dropping largely because investors are feeling skittish about the European debt crisis and are putting their money into stable investments such as U.S. Treasuries. Yields on those Treasuries tend to closely follow mortgage rates, and word on the street is that as long as uncertainty in Europe prevails, so too will low rates.
Low borrowing costs and the lowest home prices in nearly a decade are creating unprecedented opportunities for home buyers. As of the end of April -- so not factoring the latest record low rates, the Minneapolis Area Association of Realtor's housing affordability index for the Twin Cities metro stood at a near-peak 238, which means that the median household income in the area was 238 percent of what is necessary to qualify for the median-priced home under prevailing rates.
Low rates also mean that it's time to consider refinancing, though many homeowners aren't in a position to do that because they owe more than their house is worth. Or, they're having trouble getting qualified for the mortgage. The National Mortgage Bankers Association said that mortgage applications were up 9.2 percent for the week ending May 11, and that the refinance share of those apps increased to 74.9 percent of all applications from 72.1 percent the week before. With fixed-rate mortgages so low, applications for adjustable-rate mortages are falling.
Why foreclosures were up in Minnesota, but down nationwide
Posted by: Jim Buchta under Foreclosures Updated: May 17, 2012 - 2:38 PMRealtyTrac said Thursday that while foreclosure activity was down across the country during April, it was up in Minnesota and several other states. “Rising foreclosure activity in many state and local markets in April was masked at the national level by sizable decreases in hard-hit foreclosure states like California, Arizona and Nevada,” according to Brandon Moore, RealtyTrac’s CEO.
In Minnesota, foreclosure activity increased 11 percent from March to April and was up 3 percent from last year. Those increases were a contrast to a nationwide decline of 5 percent from the previous month and 15 percent from last year. One in every 698 U.S. housing units had a foreclosure filing during the month compared with only one in every 860 households in Minnesota, which has consistently been among the lowest in the nation.
Because Minnesota is one of several states that doesn’t require judicial approval, lenders can typically process foreclosures more quickly than those states that have such a requirement. Aside from such legal differences from state to state, there are a number of reasons why foreclosures are down across the country. New laws impose daunting fines for lenders that bungle a foreclosure proceeding, so many lenders are now embracing short sales as a way to avoid such penalties. Several states have radically streamlined the foreclosure process, resulting in fewer “catch-up” foreclosures. And finally, an improving economy is helping more homeowners avoid foreclosure altogether.
The report tracks a variety of foreclosure-related notices, including foreclosure warnings along with actual foreclosure sales. From state to state both measures have been uneven, largely depending on foreclosure laws in those states and the status of dominant lenders in those states. Some say that means that the state is likely to burn through its inventory of distressed sales more quickly than states where the process takes longer. In fact, activity was down 29 percent in non-judicial states, though Minnesota was one of only seven such states that posted an annual increase.
Last week Twin Cities-based HousingLink said that from January though March in Minnesota there were 4,836 sheriff’s sales, or 10 percent fewer than the same quarter last year, the lowest level since 2007. The report also noted that there are still some counties where the problem is getting worse. Dan Hylton, HousingLink’s research manager, who said that while the trend is positive, he warned that the number of people who have lost their home is still nearly four times higher than the 1,618 quarterly average posted in 2005. He said that declines in foreclosure sales have been strongest in the Twin Cities metro, which posted a 11.5 percent decline compared with a 7.4 percent decline in outstate counties.
Is the future of the local commercial real estate market half full, or half empty?
According to the University of St. Thomas Opus College of Business’ fifth semi-annual Commercial Real Estate Survey, the future looks half empty. And that’s after real estate professionals said it was half full last fall.
An explanation: The survey released this week polls 50 commercial real estate industry leaders — from developers to financiers — to gauge their expectations in six categories, including vacancy and rental rates, land prices, building material prices, new project financing, and rates of return.
This spring survey’s composite index score was 49 from 51.2 last fall. (Each question has a value from zero to 100).
“We went from being slightly optimistic to slightly pessimistic,” said Herb Tousley, director of the Shenehon Center for Real Estate at St. Thomas.
This is significant, he said, because it’s the first time in five surveys that the score has dropped below the halfway mark.
One sentiment that stuck out was the view that the cost of building materials — including lumber, cement and steel — will continue to rise over the next two years. Tousley says the demand for these materials, especially as construction booms in places like India and China, is driving up prices up globally. In addition, the cost of land is expected to increase, too.
“The more you have to pay for land, the harder it is to make your deal work,” he said.
On the positive side, the survey indicated financing is available for the right projects. “Although investors and financiers are being selective about the deals that they do, that means they’re not financing the shaky deals they might have looked at five years ago,” Tousley said.
Janet Moore covers commercial real estate for the Star Tribune
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recent posts
- Home sales and prices up in Minnesota and across the country during April
- Refi at LaSalle Plaza
- Mortgage rates hit record lows
- Why foreclosures were up in Minnesota, but down nationwide
- Survey: CRE pros are slightly pessimistic
- High-traffic corner to be developed
- Twin Cities metro a top-20 "turnaround-town!"
- Higher house prices coming, according to new research
- Minnesota foreclosures fell to their lowest level since 2007
- New multi housing exec has a message: "Rent Your Home, Own Your Life."
- MNCREW race noted by ESPN
- Fifth Street Towers sold
- The "Copham" comes to the North Loop neighborhood
- Two hot restaurant chains to locate in Bloomington
- New suburban apartments: what, where and how many
- More signs of stability - not recovery - for Twin Cities housing
Post By Category
| Architecture (52) | Buying (265) |
| Foreclosures (95) | Debt (16) |
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