Though the housing recovery in the Twin Cities metro might not be as robust as some would like, the underlying fundamentals are strong. Case in point: Mortgage delinquencies have been falling steadily, which means fewer homes are falling into foreclosure. The latest report from CoreLogic shows that the foreclosure rates in the metro during July posted another healthy decline, falling to 0.52 percent from 0.95 percent last year. The delinquency rate, an indicator of future foreclosures, was down, as well (see above chart).
And foreclosure activity in the Twin Cities continues to be well below the national average, which stood at 1.66 percent during July. So while home sales have failed to keep pace with last year's levels, the number of heavily discounted distressed sales continues to fall, eliminating a formidable drag on prices. I'll have the latest home sales report for the Tiwn Cities on October 13, stay tuned.
- Jim Buchta
House prices in the Twin Cities metro and beyond continue to rise, but at a much more moderate pace. In the Twin Cities prices were up 5.4 percent during July, slightly below the national average, according to the latest S & P/Case-Shiller Home Price Index, which uses public records to track repeat sales of the same property across the U.S.
Nineteen of the 20 cities tracked by the group saw lower annual returns during July. Las Vegas, Miami and San Francisco were the only cities to report double-digit annual gains. All cities but one posted a month-to-month gain, but 17 of them saw smaller increases in July as compared to last month
“While the year-over-year figures are trending downward, home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years" said David Blitzer, chairman of S & P's Index Committee.
Rising home prices continue reducing the number of people who have a mortgage that exceeds the value of their house. In the Twin Cities metro, 8.0 percent, or 46,099, of all residential properties with a mortgage were in negative equity at the end of the second quarter, according to CoreLogic. That's compared with 10.4 percent during the first quarter and 10.7 percent nationwide.
The states with the higher rate of negative equity:
An infusion of cash is expected to help a Twin Cities non-profit help about 20 Twin Citians with credit problems become homeowners. U.S. Bank has invested $2.6 million investment in the Sustainable Home Ownership Program (SHOP) Bridge to Success Fund, which also received funding from clients of the bank's high net-worth wealth management unit Ascent Private Capital Management.
SHOP is a partnership between Greater Metropolitan Housing Corporation and Dayton’s Bluff Neighborhood Housing Services, which sells houses, like the one in the Dayton's Bluff neighborhood pictured above and below, to people who are ineligible for traditional financing on a contract for deed that enables them time to resolve credit issues and eventually get permanent financing. That process usually takes 5 to 10 years.
Investors also include the Minnesota Housing Finance Agency and the nonprofit Family Housing Fund are also investors. SHOP is apparently one of the first programs in the country to take the approach. The program was applauded by the Federal Reserve Bank of Minneapolis.
Here's what Phillip Trier, market president for U.S. Bank in the Twin Cities, had to say about the company's involvement in the program: “In addition to soliciting private business investment, SHOP provides an attractive, socially-responsible investment opportunity for individual high-net-worth investors. Hopefully, it can serve as a template and help generate capital to support homeownership nationwide.”
The housing market in the Twin Cities continues to adjust to growing declines in foreclosure listings, according to a monthly report released this morning by the Minneapolis Area Association of Realtors. With fewer investors chasing foreclosures, there were 5,291 closings in the Twin Cities last month, a 7.3 percent decline compared with last yearAnd with fewer heavily discounted homes being sold and more traditional buyers on the hunt, the median price of those sales increased 5.3 percent to $219,001. That was the 30th consecutive year-over-year increase and the highest August median sales price since 2007. Here's a look at what happened during the month:
We'll have a full story in the Friday paper.
- Jim Buchta
A Chicago/Milwaukee development duo is planning to convert the historic Jackson Building in the North Loop neighborhood in Minneapolis into a 120-room hotel with a restaurant/bar aimed at creating "an enclave for locals and appeal to travelers in search of an authentic, one-of-one Minneapolis experience."
The yet-to-be-named hotel could become only the second hotel in the North Loop is and is slated to be developed by a joint venture ( "300 Washington Avenue LLC") between Milwaukee-based Fe Equus Development, which developed the Iron Horse Hotel in Milwaukee, and the Aparium Hotel Group of Chicago, which will manage the hotel and restaurant/bar.
The dark red brick building has been a fortress-like presence at the bustling corner of Washington and Third Avenues since the very late 1800s and was at one time a farm implement showroom and warehouse. Even as the warehouses around it have been redeveloped, the five-story building has been vacant for years. Wayzata Partners was the most recent owner of the building, but their attempts to convert the building into 70 market-rate rental apartments failed and the building went back to the bank.
The 300 Washington Avenue LLC bought the 93,000 square-foot building at the end of July from MinnWest Bank for $4.6 million and is working with Twin Cities-based ESG Architects on plans for the conversion.To finance the project, the group plans to apply for historic tax credits, and says they've lined up a lender to finance construction. Plans have yet to be submitted to the city, but construction is expected to begin next year in time for a 2016 opening.