House prices in the Twin Cities and across the country are rising, though not as quickly as last year, according to the latest S&P/Case-Shiller House Price Indices, which show prices in the Twin Cities rising 1.3 percent from April and 8.4 percent compared with last year. A 20-city composite including the largest metros in the nation was up 1.1 percent from May and 9.3 percent from last year.
While the month-to-month increase in the Twin Cities was one of the biggest gains since last year, the more moderate annual gain nationwide was below expectations.
“Housing has been turning in mixed economic numbers in the last few months," said David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. "Prices and sales of existing homes have shown improvement while construction and sales of new homes continue to lag. At the same time, the broader economy and especially employment are showing larger improvements and substantial gains.”
Here are a few highlights from the report:
After six years in the making, Twin Cities-based Artspace received word that its first off-shore project is one step closer to reality.The nonprofit real estate developer, in partnership with Honolulu-based PA’I and Honolulu-based HKI, plans to build the Ola Ka ‘Ilima Artspace Lofts, a mixed-use arts development that includes 84 units of affordable housing live/work housing for artists and their families, space for other non-profits and gathering space for community events.
The Hawaii Housing Finance and Development Corporation (HHFDC) approved the Artspace request for low-income housing tax credits to help finance the $38 million project, which will be located in the Kaka’ako neighborhood of Honolulu.
"The HCDA has been following this project for over a year now, and we're excited that it's one step closer to providing much needed housing for lower income groups," said Hawaii Community Development Authority Executive Director, Anthony Ching.
The tax credit brings $17 million in upfront equity to the project’s capital budget, enabling Artspace to focus on the final phase of fundraising. Construction is expected to start in 2015.
After a record downward revision in May, new home sales across the country last month posted a surprisingly large 8.1 percent decline last month, causing considerable angst about the health of the recovery. Here's a roundup of perspectives about the latest reports.
Wells Fargo Securities: Home sales were expected to fall in June, but that was after an unusually-large gain was originally posted in May. More than half of May’s gain was revised away and the decline in June erased the remainder, pushing the headline number to a low for the second quarter. Judging from the mortgage applications data, home demand remains weak; however, builder sentiment and existing home sales are improving again.
Brad Hunter, Chief Economist at Metrostudy: "We are back to a situation where home shoppers are shopping but a relatively small proportion of them are actually buying. This is explained in some cases by a long lead time (people taking longer to make a decision), and in other cases by a complete reluctance to buy.....after months of strong sales, more than offsetting the declines in February and March, new home sales activity has slowed dramatically in June. Temporary activity thanks to improved weather and pent-up demand appears to have been quickly satisfied. Going forward, new demand will be dependent on the consumers' ability to afford a new home. However, with house price appreciation outpacing income growth, many potential home-buyers are already being priced out of the market
Quicken Loans Vice President Bill Banfield: “The volatility in the new home sales data is leaving more questions than answers especially when considered with the recent increase in existing home sales. With interest rates generally improving this year, the volatility in recent sales may be driven more by availability of inventory and employment.”
JEF Economics: Before getting into the detail, it is important to view this data in context. New home sales, over time, tend to be volatile. Single-family new home sales make up a small percentage of overall home sales. So, a small sample is scaled up through seasonal adjustment and then multiplied by 12 to generate an annualized rate. Very small fluctuations in the monthly raw data can generate very large swings in the headline data. This was the case with the May revision. It was originally reported that there were 49,000 homes sold in May on a non-seasonally adjusted basis. This was revised down to 42,000 in today’s release. So a 7K decline in the absolute number of homes sold resulted in a 62K decline in the seasonally adjusted annualized selling rate. So, this month’s data and the revision to last month are discouraging. We had been expecting that the housing sector would regain the momentum lost over the winter and that both new and existing home sales and the pace of home construction would accelerate through the spring and summer. Existing home sales are recovering nicely, but housing starts and new home sales remain week.
As part of my reporting for a story in the Tuesday paper about a record-breaking $8 million Minneapolis condo that hit the market recently, I asked Zillow.com to scour the national listings in search of the biggest condos on the market. The Minneapolis unit, by the way, is the 12th largest in the nation, and it's interesting to note that the biggest units aren't the most expensive.
Need space? This penthouse condominium has nearly 12,000 square feet and is the largest condo in the Twin Cities and one of the largest homes in the metro. Its sole owner was Horst Rechelbacher, who died earlier this year. The two-level pad sits atop the Phoenix on the River condo building across the Mississippi River from downtown Minneapolis and has sweeping 270-degree river and skyline views. It's on the market for $8 million, making it one of the most expensive condos in the market. On a per-square-foot basis, however, it's not the most expensive. It's listed at about $700 per square feet. A another riverfront condo owned by the late Sage and John Cowles, former owners of the Star Tribune, recently sold for a record $1,000 per square foot. Here's a run-down on some of the features in the Horst condo:
Barry Berg and Chad Larsen of Coldwell Banker Burnet have the listing. (Click here for a slideshow)
As the numerous construction cranes that dot the Minneapolis skyline suggests, the city is in the midst of a development boom fueled by a steady economic recovery. If you're interested in getting a better understanding of the many facets of the city's economy, click here to see "Minneapolis Trends," a 44-page quarterly review of socioeconomic and housing data. Below is an exerpt that focuses on housing.