Man, talk about timing.
The day before Council Member Lisa Goodman (7th Ward) hosted a community forum to discuss, among other topics, the health of the Downtown housing market, the city got slammed with some troubling real estate news.
Aug. 24 headlines blared an ugly stat: According to a report by the National Association of Realtors, area home sales had nosedived 42 percent in July, placing the Twin Cities dead last in a survey of 20 big cities around the nation.
The 30 or so Downtown residents who gathered for August’s Lunch with Lisa — a monthly community forum moderated by Goodman — wondered: Could the housing market really be that bad?
“Couldn’t be a better day for this than after yesterday, with the media telling the world that everything is awful,” joked Fran Davis, a Realtor since 1986 who currently sells for Coldwell Banker Burnet.
Davis, one of Lunch’s featured speakers, wasn’t alarmed by the report. Just annoyed.
The 42 percent drop, she said, was like all real estate statistics: a blanket figure applied to the entire metro. It takes into consideration neither the unique particulars of the Downtown area nor the unique particulars of our post-tax-credit market. And it should be taken with a grain of salt.
The big take-away, Davis said, is that all of the government incentives for first-time buyers simply front-loaded this year with sales activity. Plus, August is always a slow month, with the start of school historically pushing house hunting to the back burner.
“Everybody had to buy by April 30,” she said, referencing the $8,000 tax credit for first-time homebuyers. (A similar credit, in the amount of $6,500 for non-first-time buyers, also expired at the end of April.) “They had to close by June 30, with a few exceptions. And that just moved all of the market to the first half of the year.
“Even though you’re hearing ‘Worst market in years,’ year-to-date, the whole area is pretty much even. We just pushed all that business up earlier.”
According to Davis, for Downtown condos and townhouses, pending sales were only down 3.7 percent from last year, which she described as “a reasonable number.” The Minneapolis Area Association of Realtors — which just in July launched a comprehensive market analytics tool called “The Thing,” which now includes pending sales figures — reports an even less negative number, a drop of only 3.3 percent from August 2009 to July 2010.
“I’d call that flat. It’s good,” said Matt Loskota, sales manager for Edina Realty’s Downtown office.
Loskota sees pending sales as the most accurate indicator of buyer interest. He cites the number of outside factors that affect a sale after a purchase agreement is signed; lenders, appraisers and banks often dicker long after a consumer has committed to buy.
“When I get judged on the performance of my office, it’s pending sales we look at,” Loskota said. He agrees with Davis that the Downtown market is faring better than the metro area market as a whole.
During the lunch, Davis said that closed sales of Downtown condos and townhouses were down 6.2 percent from last summer. The Minneapolis Area Association of Realtors reported a much higher number, though, a 11.4 percent drop.
The Association also lists that Downtown inventory has dropped 13 percent from last year, meaning units are moving. Davis said the supply is hovering around 10 months.
“So they’re not the numbers we want to see, but they’re not what the media is telling us,” Davis said.
The main issue is lack of confidence, she added. Even with mortgage rates at a stunning low, worries over job security, unemployment and whether owning a home is still a path to wealth have made shoppers too timid to buy.
And alarmist headlines don’t help.
“Irresponsible” media reports only further bruise buyers’ confidence, commented Joe Grunnet, owner of the Downtown Resource Group. “That just adds gasoline to the fire.”
Grunnet says it’s actually a better time to buy now than last spring. Low interest rates — 5.5 percent on average, according to Grunnet, as low as 3.75 for a 50-year mortgage, according to Davis — result in big savings on monthly payments. Not as sexy as an $8,000 gift. But it adds up to more savings in the long run.
As for the rental market, Goodman confirmed that it’s very strong. Occupancy levels are high. She said that Laurel Village, Loring Green and Eitel Building City Apartments are all enjoying a vacancy rate under 10 percent. She added that units in the soon-to-open Mill District City Apartments, near the Guthrie, are also being grabbed up.
Grunnet confirmed that rentals in the so-called “shadow market” — condo owners who either need to or want to rent out their properties — are also moving quickly. The Downtown Resource Group, which specializes in these transactions, had the biggest month in the last three years this August, Grunnet claimed.
As rental listings begin to appear on the local Multiple Listing Service (MLS) website — a momentous change instituted in early September — the renting process is expected to become more secure and standardized for both renters and so-called “accidental landlords.” This change, many predict, will only strengthen the Downtown rental market.
North Loop launches ‘Dining Out’ fundraiser for playground
In the North Loop, a committee of neighborhood moms has partnered with area restaurants to orchestrate a fundraiser for the proposed “tot lot “ at 4th Ave. N. and West River Parkway, on the western bank of the Mississippi River.
The “dining out in the neighborhood” program encourages people to visit various North Loop restaurants on Tuesday nights. Each week, a designated restaurant will donate a portion of its profits to fund the playground, per the following schedule:
Sept. 14: Toast
Sept. 21: Sapor
Sept. 28: Darby O’Regan’s
Oct. 5: Be’Wiched
Oct. 12: Spill the Wine
The tot lot has been a major issue for North Loop parents. It is estimated that 150 children live in the area, and families have long complained that there is no playground within walking distance. The future park has been designed to incorporate nature, history, sustainability and river stewardship themes. Construction is expected to begin in October.
The Minneapolis Parks Foundation has been working with North Loop families and businesses to raise the $100,000 necessary to complete the project.
Creator of Target Plaza’s ‘The Wave’ to speak
Ned Kahn, the California-based artist responsible for the fluttering metallic wall lining Target Plaza, visits the Hennepin County Central Library on Sept. 16. He’ll discuss “The Wave” in addition to presenting a portfolio of his other public art works.
Tom Oslund, the landscape architect who designed Target Plaza, will join in the conversation, moderated by Minnesota Public Radio’s arts reporter Marianne Combs.
Like a towering curtain of chain mail, “The Wave” links thousands of baseball card-sized metallic panels in a veil that covers the entire expanse of the B parking ramp. The panels shimmer in the wind, sending a luminous ripple across the entire sculpture. At 285 feet in length, it is believed to be the largest piece of public art in Minnesota.
Kahn speaks at noon in the library’s Pohlad Hall. Later that evening, Kahn headlines Forecast Public Art third annual “Umbrella!” fundraiser at Target Field’s Metropolitan Club.