Home prices in the Twin Cities and beyond continue to rise, but at a much slower pace. The latest S&P/Case-Shiller 20-city composite home price index showed home prices during November fell 0.1 percent from the previous month, but rose 4.7 percent compared with last year.
Prices in the Twin Cities metro fell 0.7 percent from October to November, but were up just 1.5 percent from November 2013 to November 2014.
This natonal report paints a more dour picture of house prices than the local report, which has shown annual median prices increases of 5 to 8 percent depending on the month. The discrepancy is all about statistics. Case-Shiller is an indexed, three-month average that compares repeat sales of the same house. The local report is a median based on all sales that happened during the month.
There was better news today about new home sales. A national report showed that new home sales in December rose to the highest level in more than six years, increasing nearly 12 percent from November to December. Here's a link to that report from the U.S. Census Bureau.
Twin Cities builders continue their fight against new rules they say add unnecessary costs to new houses. LaTthe Builders Association of the Twin Cities (BATC) has filed a Petition with the Minnesota Court of Appeals challenging the Department of Labor and Industry’s (DLI) amendments to the state's International Residential Code (IRC) and International Energy Conservation Code (IECC).
BATC also requested a stay of enforcement of the rule pending a ruling on its main petition.
Shawn Nelson, a former BATC executive and president of New Spaces, said the new rules are "the largest regulatory tax on home buyers in Minnesota history," and creates a financial burden that exceeds the value of the changes.
The suits follow several years of rule-making that concluded with an agreement between BATC and the DLI on most changes. For the energy code, rather than "prescriptive standards" that are more expensive, BATC advocated for more flexible performance-based rules that the group says would be less expensive and just as effective. BATC was opposed to a sprinkler requirement, which the group says is unnecessary and expensive. BATC estimates that the codes will add $6,000 to $10,000 to the cost of the average newly built home and almost $20,000 for a 4,500 square-foot (including the basement) home
The IRC and IECC updates are part of a routine code update. The building code was set to be implemented on January 24th and the energy code on February 14th.
What's next? The state is expected to respond within the next few weeks.
The Architecture Billings Index, a measurement of demand for non-residential design services, rose in December -- the tenth month of growth in the U.S. last year.
One of many national economic indicators related to development, the index provides a glimpse 9 to 12 months before construction spending is reported.
December's ABI score was 52.2, up from November's 50.9. The index uses 50 as flat activity and anything above that is viewed as an increase in demand.
As for broader economic implications, AIA's chief economist Kermit Baker says the last stalwart resisting the post-recession construction boom has been public buildings.
"Particularly encouraging is the continued solid upturn in design activity at institutional firms, since public sector facilities were the last nonresidential building project type to recover from the downturn," Baker said in a statement.
The U.S. as a whole saw more months of growth than contraction in 2014, with architectural billings dipping only two months out of 12.
The regional averages provide a more honed narrative. The strongest December growth was concentrated in the South, 56.8, and West, 52.9. Meanwhile, the Midwest hovered slightly above neutral with a score of 50.8, and the Northeast pulled down the national average at a decrease in demand of 45.5.
Update: Wednesday evening the task force approved the latest designs, and pending additional neighborhood and municapal approvals, the developer hopes to break ground this fall.
Lennar Multifamily has unveiled new designs for its proposed redevelopment of a once-polluted two-block site in Northeast Minneapolis, and will seek approval from a neighborhood task force Wednesday evening to proceed with the project. The latest plan (click here to see more renderings) calls for a 18-story apartment tower with a mostly glass facade and a swooping shape that creates curved wrap-around balconies. The project will include a low-rise apartment building atop commercial/retail space and a restaurant, and it was designed by Elness Swenson Graham Architects in Minneapolis.
The two-block site is at the corner of First and University Avenues just a few blocks from the Mississipp River. Other developers have come forward with plans for the site, but a neighborhood group has held out for a high-density project that will make a strong design statement.
Lenna Multifamily is a Chicago-based division of a national home builder that until recently has focused on building single-family homes. The company is also working on an apartment project near Southdale in Edina. Lennar's latest proposal is only for one of two adjacent blocks that have been cleared for redevelopment. Lennar extended a purchase agreement set to expire January 7, but is now working toward a February 6 "notice to proceed" deadline before a closing will be scheduled. We'll have a full report on Lennar's presentation and the task force's recommendations in the Bricks and Mortar page in the Friday Star Tribune.
The Fifth Street Towers in downtown Minneapolis have been sold for $154 million, marking the first major real estate sale in the city this year.
The buyer is a limited liability company of California-based PIMCO, a global investment firm. The seller, a Texas-based LLC joint venture between Zeller Realty and Invesco, finalized and filed the sale Friday, according to a certificate of real estate value.
Built in 1984 and 1988, the towers stand 25 and 36 stories tall, respectively. The two towers include more than 1 million square feet of skyway-connected space.
Hennepin County values the property at $112.3 million, according to tax information.
The last private sale of the property was in 2007 for $186.4 million, according to Hennepin County records.
PIMCO has not yet returned phone calls.
The Builders Association of the Twin Cities (BATC), the trade group that represents metro-area homebuilders, has a new board of directors and a new president with something of a sparkling résumé. Chris Contreras, vice president of sales and marketing for Ryland Homes in Eden Prairie, was elected by the group’s membership to a yearlong term as the association’s president. His duties will include leading a 17-member board, and overseeing the activities of the 1,100-member trade association.
BATC provides marketing, advocacy and networking opportunities for area builders. BATC runs the biannual Parade of Homes house and several other events aimed at promoting the industry. Contreras was sworn in by past president Curt Christensen, owner of Lee Lyn Construction. Contreras’ focus this year will be on increasing membership, advocacy and strengthening the association’s brand.
“Our industry is facing a number of very important challenges right now that could have a major dampening effect locally,” Contreras said. “We need to come together as BATC members and get involved to make sure our industries’ concerns are heard.”
Before stepping into the homebuilding industry, Contreras worked for more than a decade as a regional manager for a large-volume jeweler. In 2003 he was a sales agent for Ryan Homes and joined Ryland Homes in 2004.
Contreras has served on a number of committees, including the Parade of Homes committee for three years, and the large-volume builder committee, which he chaired in 2011-2012. He served as BATC’s treasurer in 2013, and vice president in 2014.
He lives in Prior Lake with his wife, two children and extended family.