Just Listed brings you the latest news and information from the Twin Cities-area commercial and residential real estate market and beyond from veteran reporters Jim Buchta and Kristen Leigh Painter.

Posts about Foreclosures

Negative equity rate in Minnesota far lower than the national average

Posted by: Jim Buchta Updated: September 25, 2014 - 9:48 AM

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:

  • Nevada: 26.3 percent
  • Florida: 24.3 percent
  • Arizona: 19.0 percent
  • Illinois: 15.4 percent
  • Rhode Island: 14.8

Twin Cities neighborhood non-profit gets $2.6 million investment from U.S. Bank

Posted by: Jim Buchta Updated: September 24, 2014 - 11:35 AM

A SHOP/Bridge to Success home in the Dayton's Bluff neighborhood of East St. Paul.

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.”

Despite a decline in home sales in the Twin Cities during August, prices were up for the 30th month in a row

Posted by: Jim Buchta Updated: September 11, 2014 - 10:29 AM

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:

  • Inventory increased 8.7 percent  18,205 home from last year, the sixth month of year-over-year inventory gains.
  • New listings were flat, increasing 0.1 percent to 6,958
  • Pending sales decreased 7.0 percent to 4,802.
  • At the current sales pace there are enough houses on the market to last 4.4 months, slightly below equilibrium.
  • Sales of traditional homes (not bank owned) increased 4.6 percent while foreclosure and short sale closings fell 50.4 percent and 58.0 percent.

We'll have a full story in the Friday paper.

- Jim Buchta

Historic North Loop building slated to become boutique hotel

Posted by: Jim Buchta Updated: September 4, 2014 - 12:44 PM

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.

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House flipping fading fast, but highly profitable in Minnesota

Posted by: Jim Buchta Updated: August 22, 2014 - 10:23 AM

House flipping is fading fast. Across the country only 31,000 single family homes were flipped — purchased and resold within 12 months — during the second quarter, accounting for just 4.6 percent of all U.S. home sales, according to RealtyTrac. That's down from 5.9 percent in the first quarter and 6.2 percent during the same period last.

In Minnesota, 3.2 percent of all closings were flips, down from 4.3 percent during the previous quarter and 10.9 percent last. Those flips garnered an average $83,000 gross profit, an above average 51.9 percent return.

Nationwide, investors averaged a gross profit of more than $46,000 per flip, a 21 percent gross return on investment. That's down from 24 percent during the previous quarter and 31 percent last year - the peak in percentage return on flips since RealtyTrac began collecting their data.

“Home flipping is settling back into a more historically normal pattern after a flurry of flipping during the recent run-up in home prices in 2012 and 2013,” said Daren Blomquist, vice president at RealtyTrac. “Flippers no longer have the luxury of 20 to 30 percent annual price gains to pad their profits. As the market softens, successful flippers will need to focus on finding properties that they can buy at a discount and efficiently add value to.”

Flip tid-bits:

  • Flips took an average of 187 days to complete.
  • High-end homes represented an increasing share of homes flipped in the second quarter. Homes with a flipped sale price of $750,000 or higher represented 4.10 percent of all homes flipped during the quarter, up 21 percent from a year ago, while homes with a flipped price of $400,000 to $750,000 represented 12.66 percent of all flips, up 10 percent from a year ago.
  • Flips on homes priced below $400,000 declined as a share of all flips from a year ago.
  • The best returns on homes flipped in the second quarter were on homes with a flipped sale price between $750,000 and $1 million, yielding a 41 percent average gross return on investment.
  • Homes in the $50,000 to $100,000 range had the second best return at 37 percent, followed by homes above $1 million at 35 percent.
  • Flips happened most often in Phoenix (1,438 flips), Los Angeles (1,371 flips) and Miami (1,290 flips). Miami was the only one of the three metro areas to see its home flipping share increase from a year ago.
  • Markets with the best return on flips: Pittsburgh (106 percent), New Orleans (76 percent), Baltimore (73 percent), Virginia Beach, Va. (66 percent) and Daytona Beach, Fla. (63 percent).

Twin Citians falling behind on mortgage payments at less than half the national rate

Posted by: Jim Buchta Updated: July 23, 2014 - 9:05 AM

As I reported in a story in the Sunday paper, mortage foreclosures are nearing pre-recession levels, giving house prices a major boost. This week, CoreLogic gives us another glimpse into the situation with a report on mortgage delinquencies, which have been steadily falling since the beginning of the economic recovery. In May, the delinquency rate was nearly a full percentage point lower than last year and nearly half the national average - just 2.37 percent of all mortgages were 90 days or more late compared with 4.44 percent nationwide.  

Minneapolis-St. Paul-Bloomington, MN 90+ Day Delinquency Rate Foreclosure Rate
May 2014 2.37% 0.52%
April 2014 2.43% 0.53%
March 2014 2.49% 0.55%
February 2014 2.60% 0.61%
January 2014 2.67% 0.66%
December 2013 2.73% 0.72%
November 2013 2.75% 0.78%
October 2013 2.82% 0.81%
September 2013 2.88% 0.85%
August 2013 2.90% 0.87%
July 2013 3.06% 0.95%
June 2013 3.16% 1.01%
May 2013 3.22% 1.05%
April 2013 3.36% 1.08%
March 2013 3.53% 1.15%
February 2013 3.68% 1.16%
January 2013 3.83% 1.21%

Source: CoreLogic.

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