The latest report on declines in existing home salesduring January is just one of several indicators suggesting that the house market is slowing, raising concerns about the health of the market. Here's one perspective on that topic from a well-known national source, Jonathan Smoke, who is chief economist at Metrostudy:
"Economists were expecting a 4 percent decline in existing home sales released this morning by the National Association of Realtors (NAR), but the decline was worse at 5.1 percent. Some are saying that weather likely was responsible for at least 1 percent of the decline. Regardless of whether or not you buy into the weather causing some of the decline, the existing home market is looking healthier and healthier. Put another way—I’m not worried about the year ahead based on this data. We have more of a cushion going into the spring selling season than the US Women’s Hockey Team had in the final minutes of the third period yesterday. NAR has data on single family existing sales back for more than 45 years, and that long-term average is a monthly annualized rate of 3.52 million; January’s rate is 15 percent over that level. The abnormal level of investor activity is roughly 10 percent of the volume, so take away that and we still would be at least 5 percent above average in volume. A key underlying trend is that the existing home market continues to move towards a healthier mix as non-distressed, regular resales gain market share. Resales gained 10 percent in share over the course of 2013, rising from 66 percent of total existing home transactions to 72 percent at the end of the year as both foreclosures and subsequent REO sales declined. 2014 is seeing that trend continue as non-distressed regular resales now make up 74 percent of all existing home sales. Even if volumes decline with investors retreating, prices will get support from fewer and fewer heavily discounted distressed sales. When I couple that mix trend with demand shifting towards more established buyers and therefore higher price points, I wouldn’t bet on prices declining. And what did the January report tell us? Median existing home prices were up almost 11 percent over January 2013. When the decline in volume is mainly in the type of transactions you don’t want (distress), the decline is a good thing. Also, please resist the temptation to make the lazy observation that rising mortgage rates have hurt the housing market. I continue to believe that the rise in mortgage rates we have experienced is not having an outsized negative impact. Higher rates and continued tight credit, now potentially worse due to QM implementation, is no doubt limiting demand by shifting more of the market towards higher income and older buyers away from first time and entry level. But, remember this shift is going on while sales remain well above historical standards. The 30 year rate is up a full percentage point over last year, but the bulk of the increase came last spring and summer in fear of the taper. Since the taper actually began, the 30 year rate essentially hasn’t moved. What has moved? A higher share of home purchases made in cash and a higher share of mortgages with an adjustable rate. This shift to more adjustable mortgages combined with a profile of increasingly more credit-worthy, established buyers supports the finding that actual average mortgage rates on home purchases are up only 10 basis points over last year. So much for the headline 30 year rate rise wreaking havoc.
Now that exterior changes are finished, the Northland Hotel and Conference Center in Brooklyn Park is launching the second phase of its $24 million renovation to become part of the Marriott hotel chain.
Once the work is complete, probably this summer, the property will become the Minneapolis Marriott Northwest, according to StepStone Hospitality, the hotel’s management company.
The exterior work included the addition of new limestone and granite stonework and ornamental metalwork to the porte cochere. (Although your blogger completed both high school and college French she had to look up this term. It means a roofed entryway where people can access or exit vehicles.)
A new roof, brickwork, lighting and painting was part of the mix, as well. Landscaping and an irrigation system will wait until spring.
Next up? Work on guest rooms in the 230-room hotel, and meeting space, including three ballrooms, a 140-seat amphitheater and 25 smaller meeting rooms. All told, the hotel has more than 33,000 square feet of meeting space, making it one of the top 10 conference hotels in the Twin Cities. The lobby and front-desk area will be rehabbed, as well as the fitness center and a new restaurant.
The hotel will remain open during renovations. It was purchased in October 2010 by a joint venture between principals of Rhode Island-based Hotel Asset Value Enhancement Inc. and an institutional investment fund advised by Long Wharf Real Estate Partners LLC.
Janet Moore covers commercial real estate for the Star Tribune.