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Why global volatility has been good news for home buyers

Global volatility has investors on edge, but there was a wee bit of a silver lining for home buyers: The average 30-year fixed-rate mortgage rate dropped to 3.84 percent, the lowest mark since May and the fifth consecutive week with a rate below 4 percent, according to a weekly survey from Freddie Mac.

How long will it last? Hard to tell. Here's one perspective from Sean Becketti, chief economist for Freddie Mac:

"Given the recent volatility, mortgage rates could change up or down significantly by the time this report is released. There are indications though that the unsettled state of global markets will make the Fed think twice before taking any action on short-term interest rates in September. If that's the case, the 30-year mortgage rate may remain subdued in the short-to-medium term, providing support for continued strength in the housing sector. Just this week, new home sales were reported to be up 26 percent year over year."

And here's a look at other rates (for the week ending August 27):

  • The 15-year averaged 3.06 percent with an average 0.6 point.
  • The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.90 percent this week with an average 0.4 point.
  • The 1-year Treasury-indexed ARM averaged 2.62 percent this week with an average 0.3 point, unchanged from last week.

Minneapolis city staff recommends selling highly visible Mill District site to Mortenson

Mortenson's design renderings for 800 Washington Av. S.

City of Minneapolis staff are recommending the City Council award M.A. Mortenson exclusive negotiating rights for a highly visible strip of land on Washington Avenue in the Mill District.

Mortenson was up against two other local developers in a competitively bid process for the purchase and development of 800 S. Washington Av. The decision came down to Mortenson versus Minneapolis-based Sherman Associates -- a prolific developer in the neighborhood. Ultimately, tax revenue was the deciding factor. Mortenson's project is expected to produce nearly $825,000 in annual taxes compared to Sherman's $665,000.

Mortenson also offered to buy the land for $3.7 million compared to Sherman's $3.5 million.

Staff from Community Economic and Development Department, finance and the city attorney outlined their reasoning for the selection in a document released Friday. The staff noted similiarities between the Sherman and Mortenson proposals, including building massing and height, mix of uses, total development costs (between $47-49 million), timeline and connections with the adjacent Riverfront parking ramp and American Academy of Neurology. But, the financial components and tenants were the tipping point. 

Here are the details of all three proposals:

Staff was also leery about Sherman's proposal for a Pinstripes, which is a dining, bowling, bocce ball and event center concept. There's one in Edina that has seen considerable success. But, staff wrote, "there is no proven long-term market in this area for a business like Pinstripes."