Minneapolis-St. Paul does not have the cheapest housing stock in the nation, but its higher wages make it the most affordable city for home ownership among the 25 largest U.S. metro areas, according to a new report.
Interest.com calculated its new rankings based on several criteria. The study found that the median household income in the Twin Cities is a little more than $67,000 -- nearly $15,000 above the national average -- and the median-priced home is nearly $213,000.
The margin isn't as great as last year, but the median income exceeds the wage requirements for purchasing a home by 23 percent. These figures, when combined with median property taxes and homeowners insurance rates, helped lift Minneapolis-St. Paul from the No. 2 spot in 2013 to No. 1 this year.
“The places that are the most unaffordable are locked in by some geographic constraint. Minneapolis (area) can grow 360 degrees. Most of the time when you talk about this, you talk about sprawl and you think of it in negative terms. But the bottom line is,sprawl keeps your prices down," said Mike Sante, managing editor of Interest.com.
Atlanta won the crown last year, but swapped rank with the Twin Cities this year. St. Louis, Detroit, Pittsburgh, Baltimore, Phoenix, Washington, Dallas and Houston rounded out the top ten.
Interest.com suggests that median-income workers cannot afford a home in the remaining large metro areas because the wages don't match the real estate costs.
San Francisco, not surprisingly, scrapes the bottom with San Diego, New York, Los Angeles and Miami also receiving "F" scorecards. Moving up from the bottom, the other unaffordable cities are Boston, Seattle, Sacramento, Milwaukee, Denver, Portland, San Antonio and Tampa.
“Low mortgage rates are helping home affordability to some extent, but the key ingredient – which has been missing to this point – is substantial income growth,” Sante said in a statement. "Affordability would improve at a faster pace if wage growth would pick up."
For comparison, the median-income earner in Minneapolis-St.Paul may make about $10,000 less than the median-income earner in San Francisco. But, the median-home price in the Twin Cities is $213,000 to San Francisco's $770,000 -- a gap that the wage difference doesn't even come close to making up.
Sante says Minneapolis-St. Paul has a great housing market with better median-priced inventory than other cities, but says wages have to keep growing.
Year-over-year wages grew by an average of 2 percent across the 25 largest metropolitan areas, but the Twin Cities only grew 1.38 percent this year.
“If that continues, homes in the Twin Cities will be much less affordable in a decade,” Sante said.
The retail space is now fully leased at Latitude 45, the high-end apartment building still under construction on Washington Av. downtown Minneapolis.
The 10,000 square feet of ground-level retail will be split into two businesses: a destination restaurant and massage spa.
Restauranteur Ryan Burnet will fill more than 6,000 square feet at the corner of 3rd and Washinton avenues with what he hopes is an "approachable destination" restaurant.
The developer, Alatus, announced in March that Burnet -- who has seen success in the Minneapolis restaurant scene with Bar La Grassa, Burch Steakhouse & Pizza and Barrio Tequila Bar -- had signed a letter of intent to open a new concept at Latitude 45.
Burnet, who officially signed the lease two weeks ago, said the concept is still being fleshed out, but there are certain segments of the dining scene he hopes to capture with this new restaurant.
"I want people who live in the building to feel comfortable coming down in their sweatpants for a beer on Saturday night with people in business suits at a table nearby," Burnet said.
There is no shortage of quality restaurants in Minneapolis, but Burnet wants this to be a staple for the extended neighborhood.
"The goal is for people who would want to come back multple times a week, not just once a month," Burnet said.
To do this, he said, "the bar will have a lack of pretense and that will be reflected in the cost structure as well."
Massage Envy will occupy more than 4,000 square feet at the other corner, 4th and Washington avenues, fitting the lifestyle of the building's likely clientele. The Star Tribune reported in March that Alatus was targeting empty-nesters and "aspirational" young professionals.
Andrea Christenson of Cassidy Turley brokered the deals. This is the only downtown residential building to pre-lease all of its retail space while still under construction, she said.
"People will want to live in this building just knowing there’s a Ryan Burnet restaurant downstairs," Christenson said. "We really think that being near the river, in that neighborhood and being skyway connected is the perfect storm."
The 319 apartment units will be ready for move-in by the summer. Burnet anticipates being open for business in September 2015.
Recent - and unexpected - declines in mortgage rates over the past several months have sparked some very low levels of refinance activity. A boomlet? Compared with previous levels of refinancing, no. But during the middle of October, for example, mortgage rates dipped slightly to the lowest they've been since the summer 2013. During the third quarter refi activity nationwide rose to about $8 billion, which is less than one-tenth of the refi activity when the market peaked in mid-2006. Still, an analysis by Freddie Mac shows that reduced mortgage payments will save American homeowners more than $1.5 billion in interest payments over the next 12 months with an average interest rate reduction of about 1.3 percentage points , or a savings of about 24 percent. And with house prices on the rise, the share of those cash-out refinancings is on the rise, increasing from 3 percent during the third quarter 2012 to almost 8 percent by the end of September.
An surprise dip in mortgage rates last month did little to warm home buyers. During October there were 4,523 home sales in the 13-county metro, a 1.5 percent decline compared with last year, according to a monthly sales report released this morning by the Minneapolis Area Association of Realtors. Because fewer of those sales were foreclosures, the median price of those deals increased 7.2 percent boost to $209,000 - the 32nd consecutive month of year-over-year price gains. Here's a peak at other hightlights from the report (we'll have a full story later today):
United Properties plans to build a 240,000 square foot office building on the final parcel adjacent to the Target Field light-rail station in Minneapolis' North Loop neighborhood.
The developer announced Wednesday that it is moving forward on the 10-story building without any tenants, a sign of the company's confidence in the rebounding market and its location.
This is another stake in the booming North Loop ground for United, which shares the same owner as the Minnesota Twins team that play next door. Both the Twins and United are Pohlad Family companies.
At the corner of 6th Av. N. and 5th St. N, the project site is next to the light-rail stop that serves the Twins ballpark and is across the street from another high-profile construction project, Be The Match headquarters, that United is currently developing.
United and the Twins began working with Hennepin County in 2012 to develop the land near Target Field Station. The development arm of the Pohlad Family Company built out the Caribou Coffee earlier this year that sits below the light-rail platform and the Ford Center across the street.
This project, while still in the early stages, would bring more premium office space to the neighborhood -- something that, until recently, sorely lacked.
The news comes on the heels of another announcement for a speculative office building in the North Loop. Hines unveiled its plans last week for a seven-story building that will sit just a few blocks from United's new site.
United's project concept is for a transit-oriented building with all the amenitites office seekers are now desiring -- a roof terrace and lounge, bike storage and fitness center. Additionally, this project will have a restaurant and the ground level and offer underground executive parking.
But first, United must purchase the 0.75-acre parcel from Hennepin County. The company intends to go through the city's entitlement process in early 2015. United hopes to break ground next fall with a target completion date of late 2016.
“The development of this new project at Target Field Station builds on United Properties' previous success and ongoing commitment in the North Loop,” said Bill Katter, executive vice president, United Properties, in a statement. “This area continues to be one of the most exciting places for next-generation office space in the Twin Cities.”
Jim Montez of Cushman & Wakefield|NorthMarq, another Pohlad company, will head leasing of the office space.
Another national investor is making a big investment in Twin Cities real estate. South Carolina-based Greystar paid $49 million - a whopping $270,000 per unit - for the Junction Flats apartments in the North Loop neighborhood in downtown Minneapolis, according to public records.
The 182-unit property was developed by Dallas-based Trammell Crow in one of the most rapidly developing developing corners of the city. The building is at 643 Fifth St. N. near Target Field and the new Target Field Station transit hub, and is within walking distance of downtown Central Business District. Residents started moving in on August 1 and the building is nearly half occupied.
Greystar is a big national player that's relatively new to Minneapolis. The company developed Elan, a massive multi-phase luxury apartment building with nearly 600 units along the Midtown Greenway in the Uptown neighborhood, and is planning to build a high-rise apartment building along Lake Calhoun.
Trammell Crow has been active in the Twin Cities, as well. The company developed Arcata, a 165 unit rental bulding at Xenia and Golden Hills Drive in Golden Valley, and that's scheduled to open December 1. The company is also building the 175-unit Island Residences at Carlson Center in Minnetonka.
Several major commercial and apartment properties in the Twin Cities have been snapped up national investors who have paid premium prices. Just last week, for example, a Chicago-based partnership paid a record price for the Normandale Lake Office Park.