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.

Expert insights into the steep decline in new home sales

Posted by: Jim Buchta under Buying Updated: July 24, 2014 - 11:58 AM

After a record downward revision in May, new home sales across the country last month posted a surprisingly large 8.1 percent decline last month, causing considerable angst about the health of the recovery. Here's a roundup of perspectives about the latest reports.

Wells Fargo Securities: Home sales were expected to fall in June, but that was after an unusually-large gain was originally posted in May. More than half of May’s gain was revised away and the decline in June erased the remainder, pushing the headline number to a low for the second quarter. Judging from the mortgage applications data, home demand remains weak; however, builder sentiment and existing home sales are improving again.

Brad Hunter, Chief Economist at Metrostudy: "We are back to a situation where home shoppers are shopping but a relatively small proportion of them are actually buying. This is explained in some cases by a long lead time (people taking longer to make a decision), and in other cases by a complete reluctance to buy.....after months of strong sales, more than offsetting the declines in February and March, new home sales activity has slowed dramatically in June. Temporary activity thanks to improved weather and pent-up demand appears to have been quickly satisfied. Going forward, new demand will be dependent on the consumers' ability to afford a new home. However, with house price appreciation outpacing income growth, many potential home-buyers are already being priced out of the market

Quicken Loans Vice President Bill Banfield: “The volatility in the new home sales data is leaving more questions than answers especially when considered with the recent increase in existing home sales. With interest rates generally improving this year, the volatility in recent sales may be driven more by availability of inventory and employment.”

JEF Economics: Before getting into the detail, it is important to view this data in context. New home sales, over time, tend to be volatile. Single-family new home sales make up a small percentage of overall home sales. So, a small sample is scaled up through seasonal adjustment and then multiplied by 12 to generate an annualized rate. Very small fluctuations in the monthly raw data can generate very large swings in the headline data. This was the case with the May revision. It was originally reported that there were 49,000 homes sold in May on a non-seasonally adjusted basis. This was revised down to 42,000 in today’s release. So a 7K decline in the absolute number of homes sold resulted in a 62K decline in the seasonally adjusted annualized selling rate. So, this month’s data and the revision to last month are discouraging. We had been expecting that the housing sector would regain the momentum lost over the winter and that both new and existing home sales and the pace of home construction would accelerate through the spring and summer. Existing home sales are recovering nicely, but housing starts and new home sales remain week.

Mortenson builds biggest flagpole in America

Posted by: Janet Moore under Vikings Updated: July 24, 2014 - 11:00 AM

And you thought the Vikings stadium was a feat of engineering and construction might.

Golden Valley-based Mortenson Construction has constructed North America's tallest flagpole. Located at the Sheboygan, Wis., headquarters of Acuity Insurance, the pole spans 400 feet. That is seriously tall -- if you dropped a ball from the top of the pole, it would take five seconds for it to reach the ground (this according to the Internet's mathematicians, so don't hold me accountable).

Acuity hired Mortenson to build the pole, which is a "symbol of freedom and hope," said the firm's president and CEO Ben Salzmann. The pole was dedicated last month.

The pole consists of six steel tubes, and Mortenson officials say they utilized their expertiese from the firm's  renewable energy group for the project. Flagpoles are similar to wind turbine towers, apparently.

The flag is four stories tall, and two versions will be used: A 220-pound flag for normal conditions and a 350 pound flag for harsher weather.

The flagpole itself weighs about 420,000 pounds and is designed to withstand low temperatures up to 42 degrees below zero.

A video here describes the construction of the pole.

Architects busy designing new projects

Posted by: Janet Moore Updated: July 23, 2014 - 11:53 AM

Construction at the University of Minnesota

Construction at the University of Minnesota

Another day, another study with another indicator showing how the economy appears to be humming along.

On Wednesday, the American Institute of Architects released June's Architecture Billings Index, which is calls a "leading economic indicator of construction activity."

The index, which reflects the nine- to 12-month lead time between architecture billings and construction spending, was 53.5 for the month, up from 52.6 in May.

AIA says the score reflects an increase in design activity -- and any score over 50 means there's been an increase in billings. Two other measures, New Projects Inquiries and New Design Contracts, increased to 66.4 and 55.7, respectively.

The score for design contracts in June was the highest mark since the tally began in October 2010.

The data "is indicative of a sustainable strengthening across the construction marketplace," said AIA Chief Economist Kermit Baker, in a statement. "With the first positive reading since last summer in billings at institutional firms, it appears that design activity for all major segments of the building industry is growing. The challenge now for architecture firms seems to be finding the right balance for staffing needs to meet increasing demand."

A few more highlights: The Midwest was the highest scoring region of the countrie in overall billings at 56.3. By sector, multi-ramily residential was 57.7, mixed practice was 53.8, commercial/industrial was 53.1 and institutional, 50.2.

Twin Citians falling behind on mortgage payments at less than half the national rate

Posted by: Jim Buchta under Foreclosures Updated: July 23, 2014 - 9:05 AM

As I reported in a story in the Sunday paper, mortage foreclosures are nearing pre-recession levels, giving house prices a major boost. This week, CoreLogic gives us another glimpse into the situation with a report on mortgage delinquencies, which have been steadily falling since the beginning of the economic recovery. In May, the delinquency rate was nearly a full percentage point lower than last year and nearly half the national average - just 2.37 percent of all mortgages were 90 days or more late compared with 4.44 percent nationwide.  

Minneapolis-St. Paul-Bloomington, MN 90+ Day Delinquency Rate Foreclosure Rate
May 2014 2.37% 0.52%
April 2014 2.43% 0.53%
March 2014 2.49% 0.55%
February 2014 2.60% 0.61%
January 2014 2.67% 0.66%
December 2013 2.73% 0.72%
November 2013 2.75% 0.78%
October 2013 2.82% 0.81%
September 2013 2.88% 0.85%
August 2013 2.90% 0.87%
July 2013 3.06% 0.95%
June 2013 3.16% 1.01%
May 2013 3.22% 1.05%
April 2013 3.36% 1.08%
March 2013 3.53% 1.15%
February 2013 3.68% 1.16%
January 2013 3.83% 1.21%

Source: CoreLogic.

Woodbury Lakes shopping center sold to Michigan investment trust

Posted by: Janet Moore Updated: July 22, 2014 - 4:28 PM

The Woodbury Lakes shopping center, located in the eastern suburb along Interstate 94, has been sold.

The center in Minnesota and another called Bridgewater Falls near Cincinnati were sold for about $150 million. The pricetag for the individual centers was not revealed by the buyer, Ramco-Gershenson Properties Trust of Michigan.

Spanning 366,000 square feet, Woodbury Lakes features Trader Joe's, buybuy Baby, DSW, H&M, The Gap, Charming Charlie and Michael's as anchor retailers. In-line retailers include Banana Republic, Victoria's Secret, White House/Black Market, American Eagle, Chico's, LOFT, Buckle and Express.

Built in 2005, the center is now 89 percent leased. Part of the deal involves Ramco-Gershenson to purchase additional acreage for the development of restaurants and other entertainment uses.

Ramco-Gershenson is a publicly traded real estate investment trust with 79 shopping centers and one office building in its portfolio.

Just Listed: The nation's 12 largest condominium listings

Posted by: Jim Buchta under Architecture, Buying Updated: July 22, 2014 - 9:51 AM
This 14,260 square-foot condo near the top of Trump Tower in Chicago is on the market for $32 million.

This 14,260 square-foot condo near the top of Trump Tower in Chicago is on the market for $32 million.

As part of my reporting for a story in the Tuesday paper about a record-breaking $8 million Minneapolis condo that hit the market recently, I asked Zillow.com to scour the national listings in search of the biggest condos on the market. The Minneapolis unit, by the way, is the 12th largest in the nation, and it's interesting to note that the biggest units aren't the most expensive.

  1. 20,000 sqft, Miami Beach, FL – http://www.zillow.com/homedetails/605-Lincoln-Rd-Miami-Beach-FL-33139/2106486697_zpid/
  2. 17,868 sqft, Morgantown, WV – http://www.zillow.com/homedetails/1701-Waterfront-Pl-Morgantown-WV-26501/2107397160_zpid/
  3. 15,768 sqft, Honolulu, HI – http://www.zillow.com/homedetails/2500-Aha-Aina-Pl-LOT-B-Honolulu-HI-96821/2107991513_zpid/
  4. 15,691 sqft, Las Vegas, NV – http://www.zillow.com/homedetails/9101-Alta-Dr-UNIT-1801-Las-Vegas-NV-89145/79878576_zpid/
  5. 15, 434 sqft, New York, NY – http://www.zillow.com/homedetails/10-West-St-New-York-NY-10004/61965199_zpid/
  6. 14,260 sqft, Chicago, IL – http://www.zillow.com/homedetails/401-N-Wabash-Ave-UNIT-89A-Chicago-IL-60611/113952385_zpid/
  7. 14,000 sqft, Sunny Isles Beach, FL – http://www.zillow.com/homedetails/17001-Collins-Ave-APT-4904-Sunny-Isles-Beach-FL-33160/92441535_zpid/
  8. 13, 528 sqft, Marco Island, FL – http://www.zillow.com/homedetails/970-Cape-Marco-Dr-UNIT-2506-Marco-Island-FL-34145/63473338_zpid/
  9. 12,370 sqft, Dallas, TX – http://www.zillow.com/homedetails/3505-Turtle-Creek-Blvd-E-Dallas-TX-75219/2105973405_zpid/
  10. 13,842 sqft, Naples, FL – http://www.zillow.com/homedetails/4101-Gulf-Shore-Blvd-N-N-PH1-Naples-FL-34103/60549581_zpid/
  11. 12,050 sqft, Naples, FL – http://www.zillow.com/homedetails/4101-Gulf-Shore-Blvd-N-PH-2-Naples-FL-34103/60541852_zpid/
  12. 11,777 sqft, Minneapolis, MN -- http://www.zillow.com/homedetails/222-2nd-St-SE-APT-1701-Minneapolis-MN-55414/101655481_zpid/

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