These are confusing days for anyone for clear signals from the housing market. A flurry of reports released this week shows what appears to be conflicting trends. Here's a summary of those reports:
With pending sales falling, home prices rising and home building on the upswing, what's a news junkie to make of these numbers? The housing market is in the midst of a seasonal slow-down exacerbated by the government shut-down and higher mortgage rates. Indeed, low inventory is putting upward pressure on home prices - and the demand for new houses. But the unusually strong price gains are more a reflection reflection of mid-summer investor purchases and big declines in foreclosure sales.
Here's a very good summary of the situation from David Blitzer, chairman of the index committee for Case-Shiller: "Housing continues to emerge from the financial crisis: the proportion of homes in foreclosure is declining and consumers’ balance sheets are strengthening. The longer run question is whether household formation continues to recover and if home ownership will return to the peak levels seen in 2004.”
Property that is slated to become a 30-story, 262-unit residential tower was sold recently to 4Marq Property LLC, an entity associated with Mortenson Development Inc. of Golden Valley. The purchase price was $4.1 million in cash, according to Hennepin County real estate records.
Work on the tower, located at 400 Marquette Ave., will begin in December.
It will be a busy area for construction. Kitty-corner to the 4Marq tower is Opus Group's $100 million, 26-story, 253-unit luxury tower, called Nic on Fifth. And when Opus completes its work on that, it will build a headquarters expansion for Xcel Energy, which is across Nicollet Mall from the tower.
Earlier this month, Opus held a topping-out ceremony for Nic on Fifth, a symbolic gesture that typically signifies the half-way point in a big construction project.
Janet Moore covers commercial real estate for the Star Tribune.
There was a major surge in new contracts to build non-residential buildings in the Twin Cities metro last month, according to the latest McGraw Hill Construction report, which showed that there was a planned $199,731,000 in new contracts - a 43-percent increase over last year. That includes office, retail, hotels, warehouses, manufacturing, educational, healthcare, religious, government, recreational, and other buildings.
Residential construction was up as well, rising 14 percent to $324,213,000, for a cumulative increase of 23 percent.
We'll learn more about the state of the construction industy across the country when the U.S. Commerce Department releases its residential permit report on Tuesday, November 26. Because of the government shut-down, housing starts and completions data, which were also scheduled to be released tomorrow (Tuesday) won't be released until December 18.
Christian Ponder's million-dollar Minnetonka manse has a buyer, but the deal has just gone pending, so we don't yet know the name of the buyer, who stepped forward just two weeks after the house hit the market. Jeffrey Dewing of Coldwell Banker Burnet is the listing agent, here's a link to his website, which includes more details and photos of the house.
Sales of upper-bracket houses are rise in the Twin Cities metro, especially around Lake Minnetonka where listings are relatively tight and there are a limited number of homes with private lakeshore. Ponder paid $880,000 for the pad in July 2012, according to property records, but the sale price won't be public until the deal closes. Annual property taxes for the property are $18,515. Here are some highlights:
Minnesota is following the Twin Cities and the rest of the nation with a fall dip in home sales. That's according to new data from the Minnesota Association of Realtors, which shows that were 6,599 home closings during October, down 2.2 percent compared with last year. Low inventory, fewer foreclosure sales and an increase in more expensive sales helped boost the median prices of those sales to $175,000, a 12.2-percent increase over last year.
Also on Friday, the National Association of Realtors said that existing home sales nationwide were down 3.3 percent to a seasonally adjusted annual rate of 5.12 million sales compared with September, but 6.0 percent higher than last year. Sales were down for the second month in a row.
The trends were similar in the Twin Cities metro, according to a report released earlier this month
Agents blame the slowdown on higher mortgage rates, the government shut-down and the approach of winter. Lawrence Yun, NAR's chief economist, said the declines have been no suprise. "Low inventory is holding back sales while at the same time pushing up home prices in most of the country." More new construction is needed to help relieve the inventory pressure and moderate price gains."
Where to do the nation's hipsters like to hang their hats? The top zip code in the nation, according to a new analysis of rental returns, is St. Paul's 55101, which is smack dab in the middle of the city. Several Minneapolis zips made the top-25 list, but St. Paul mayor, Chris Coleman, didn't waste any time reacting to the news.
"I couldn't be more proud of our efforts to create a cool, but not too outwardly cool, vibrant but not too showy, and modern but also retro-feeling culture in our Lowertown area," Coleman said. "I might even buy some oversized chunky eye glasses and a fixed-gear bike."
“While the precise definition of hipsters is elusive —which is likely just how they want it — there’s no doubt the culture surrounding the hipster lifestyle has a major impact on local real estate markets, and mostly in a positive way,” the study said.
Saint Paul’s "Director of Hipster Recruitment," Joe Spencer had this to say: “I don’t think there’s anything I can really say,” then promptly cracked open a can of Pabst Blue Ribbon to celebrate the distinction.
The list was compiled by RealtyTrac, which "analyzed zip code-level data to identify established and emergent hyper-local hipster markets where investors can realize solid returns on rental properties while also enjoying low vacancy rates that ensure they won’t have much down time between renters."
Realtytrac started with zip codes that had a large population in the prime hipster age range — between 25 and 34, which accounts for 13 percent of the nation's population, and then focused on zip codes with more than 20 percent of the population in that age range. The list was narrowed to zip codes where at least 20 percent of the population either walked to work or used public transportation to get to work. The list was further winnowed to focus on only zip codes where renters accounted for occupancy at least 50 percent of all housing units, and the vacancy rate was 5 percent or less.
Tops on that list was 55101, a 2.9-square-mile area with a population of nearly 22,000, including downtown St. Paul and the Lowertown neighborhood - a hot spot for artists and creative types who are finding cheap rents and cool spaces in the many warehouses buildings that line those streets.
"As a nascent hipster market emerges, it can be an extremely appealing target for real estate investors looking to make some quick fix-and-flip profits or to purchase rental properties that provide a steady cash flow and the promise of strong appreciation going forward."
You can see the complete report by clicking here.