The market value of single-family homes in Minneapolis finally has begun to rebound, the city assessor says, but it's happening unevenly around the city.
The 2014 assessments that will help determine 2015 taxes show all but two neighborhoods citywide have bottomed out in median assessed value for stand-alone single-family homes. The exceptions are the Lind-Bohanon and McKinley neighborhoods, both on the city's North Side and both places where the median-value home is less than half the citywide median.
Elsewhere on the North Side, the Harrison neighborhood recorded a 14.4 percent gain in median home value, the biggest uptick among all neighborhoods with at least 100 single-family homes. It's part of the Near North community, where four of six neighborhoods recorded their second year of modest median-value gains.
Citywide, the 2014 median-value single-family home at $181,500 is up 6.8 percent from a low of $170,000 in 2012-2013. That's the first increase since the city's median value hit its prerecession peak of $213,000 in 2007, before plummeting. Assessor Patrick Todd said he expects the proposed 2015 assessments, to be mailed later this month, to be up about 5 percent.
A key dynamic is that sales of so-called distressed homes — those in foreclosure or with mortgages bigger than their value — no longer dominate the market, dragging down values for other homes. Such sales once represented more than half of the local market, but now make up just 11 percent, said Emily Green, who just finished as president of the Minneapolis Area Association of Realtors.
"There are a lot of people getting ready to put their homes on the market," she said, and with high rents, millennial-aged buyers are looking to buy. That bracket of buyers is strong in northeast Minneapolis where, Realtor Michael Gacek boasted, "We're hip. We're cool." And they're willing to trade the lakes of south Minneapolis for Northeast's affordability, said another area Realtor, Kathy Borys.
As measured by city assessors, median home values bottomed citywide a year or two after median home sales compiled by the Minneapolis Area Association of Realtors, which hit bottom in 2011.
That's because the data sets measure different things. The assessor values more than 76,000 homes rather than just several thousand that sold. The assessor data are solely for detached single-family dwellings, while Realtor data also include condos, townhouses and twin homes. Moreover, the Realtor data include sales of foreclosed and short-sold homes, while the assessor typically makes market judgments based on arms-length sales of homes.
In general, home values in Near North bottomed out a year earlier than in the newer Camden area farther north, where Realtor Deb Wagner said homes north of the railroad tracks sell more easily. Harrison's city-leading gain reflects its proximity to downtown, housing stock and lack of airplane noise, Green said.
Changes in home values are significant because they represent close to two-thirds of the city's tax base, although they're not taxed as heavily as commercial-industrial property. The city's residential tax base in 2014 was valued at $23.5 billion, compared with a high of $26.6 billion in 2007. Commercial property topped out at $7.3 billion in 2008 but has slipped to $6.5 billion. Part of the slack has been taken up by apartments, which set a post-2000 record value of $4.7 billion in 2014. That's up by more than $1 billion from the previous year, with more than half of the gain coming from new construction rather than increased valuation on existing buildings.
The run-up in tax base appears likely to continue, with the city announcing that it approved another $383.5 million in residential property in 2014, most of it in apartments or condos. That was part of a record $2 billion in approved construction, a figure jacked up by the construction of the new $1 billion Vikings stadium, which won't pay property taxes, and spinoff development, which will.