Almost four months after getting final city approval, the developers of a proposed boutique condo project in the heart of the North Loop neighborhood in Minneapolis have pulled the plug on 602 North First, a 30-unit project two blocks from the Mississippi River.
"We just don't see sufficient demand for this type of high-quality construction," said Curt Gunsbury, owner of Solhem Companies.
Gunsbury and business partner, Robb Miller of TE Miller Development, planned to develop an 8-story glass-and-concrete building that would take the place of two low-rise buildings that were to be demolished. The units would have ranged in size from 1,700 to more than 3,000 square-feet and were priced from the $700,000 to about $3.3 million.
The decision comes at a time when the market is awash in rental apartments, but has scant condo construction and very low little inventory of existing for-sale units. Last year Jim Stanton of Shamrock Development quickly sold nearly every unit at StoneBridge Lofts in the Mill District and in late March started building Portland Tower, a 17-story high-rise at the corner of 9th Street and Portland Avenue near the new Vikings Stadium where the bulk of the units will range from $300,000 to $800,000. Stanton also recently purchased a Mill District site where he plans to build upwards of 400 condo units.
Last month the developer of another proposed upscale condo project in the Linden Hills neighborhoods pulled the plug on the 19-unit project citing the exit of a key investor even though eight of the 19 units had buyers.
At the end of January, there were fewer than 150 properties on the market, including only 10 new units, compared with more than 600 at the peak of the market in late 2007, according to the Minneapolis Area Association of Realtors.
There was a bit of March madness in the Twin Cities housing market last month. Propelled by more options and near-historic mortgage rates, buyers signed 5,301 purchase agreements last month, a 30.0 percent increase over last and the most in a decade, according to a monthly report from the Minneapolis Area Association of Realtors. We're working on a full report, but here's a quick look at key measures.
Bloomington-based Doran Companies paid $10.5 million for a highly desirable 40-acre development site adjacent to The Shops at Arbor Lakes in Maple Grove. The seller was the Frances A. Seleen Trust.
Kelly Doran, owner and principal of Doran Companies, hasn't said what he'll do with the land, but said he's "eager to begin the development process but won’t be in any rush to get city approvals." Whatever gets built there will likely including housing, but could have other components as well. "We’ll take our time, work with the city and get it done right,” Doran said in a statement.
The property is at the northeast corner of Hemlock Lane and Elm Creek Boulevard and was farmed by multiple generations of the Seleen family. The property had been sale for more than a decade (read more about that saga in a story published in early February by my colleague, Kristen Painter, about Doran's plans to buy the property) and being managed by Seleen’s three grandchildren.
Opus Development Co. scuttled its plans to buy the property after facing considerable pushback from city planners.
Brenda Tuttle said the trust said the family was happy to see the land go to Doran. “Other developers have attempted to buy our property but unfortunately were unable to bring their developments to fruition."
The $10,583,569 purchase price included Doran’s assumption of $3,583,569 of special assessments for infrastructure.
Home prices in the Twin Cities are rising in line with the national average, and expected to continue at the same pace over the next year, according to a monthly CoreLogic report.
The latest CoreLogic HPI Forecast indicates that home prices, including distressed sales, increased 5.2 percent during February at the same pace as the national average. Prices in the Twin Cities are expected to increase another 5.2 percent from February 2015 to February 2016 compared with a 4.8 percent increase nationwide.
The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. CoreLogic chief economist, Frank Nothaft, attributes price gains to a shortage of listings. "Since the second half of 2014, the dwindling supply of affordable inventory has led to stabilization in home price growth with a particular uptick in low-end home price growth over the last few months," he said in an analysis. "From February 2014 to February 2015, low-end home prices increased by 9.3 percent compared to 4.8 percent for high-end home prices, a gap that is three times the average historical difference."
Home prices in the Twin Cities metro posted a 2.2 percent annual gain during January, according to the latest S&P/Case-Shiller U.S. National Home Price Index, which tracks repeat sales of the same property. Nationwide, price gains were more robust. A 10-city composite showed prices rising 4.4 percent year-over-year and 4.3 percent from December. Denver and Miami reported the highest year-over-year gains, rising 8.4 and 8.3 percent, respectively.
Typically, price gains in the Twin Cities slow during the winter. We'll have the latest data on the local market next Thursday when the Minneapolis Area Association of Realtors (MAAR) releases its March home sales report, which tracks the median price of all sales during the month. The group's weekly report shows unseasonably strong buying and selling activity.
Here's a snapshot of what happened for the week ending March 21:
Forbes compiles lots of lists, and we always try to pay close attention when the Twin Cities makes the grade. Today, Forbes released its annual list of "Best Buy Cities: Where to invest in housing in 2015," which is based on a variety of measures including appreciation, unemployment rate and house price/rent ratio. The Twin Cities metro was No. 17 just behind Jacksonville, Florida.
Several metros in Texas dominated the list, including Austin, which took the No. 1 spot in part because of its 12 percent annual home price growth. Price growth in the Twin Cities was estimated at 6 percent. Here's a link to the complete list.
- Jim Buchta