By Christopher L. Gardner, J.D

RISMEDIA, July 16, 2010—The screaming and cursing you hear in unit 404 isn’t coming from Mr. Armbrister’s television—Armbrister has just learned that another potential sale of his condominium unit fell through due to the buyer’s inability to obtain financing. In this case, the buyer wanted to purchase Armbrister’s condo unit with an FHA loan—Armbrister’s homeowners association, however, had neglected to obtain FHA approval.

Full article from Rismedia.

Find out if your developement is already approved.

Get your association approved with this guy.

But what about the condo, loft and townhome developments with less than 100 homes?
Good question…

Here, by not very popular demand, are the 2010 First Half Winners and Losers in the Downtown Minneapolis condo market. Enjoy.

Medium Buildings (50-99 units, 22 developments)

The big winners among the mid-sized developments:

Renaissance on the River, built in 2000, 92 rowhomes nestled in a cozy corner of the North Loop on River Road near the FED. Renaissance sold four homes already this year, representing over 50% of its total listings, which is even more impressive considering an average list price of $479,000.

Lindsay Lofts is a 52-unit residence on 1^st St/4^th Ave North, built in 2001. In the first half of the year, Lindsay sold 6 homes, which was 40% of the listed units, with an average sold price of $402,000.

Not faring as well among the mid-sized – The Itasca Building. As the first condo conversion in Minneapolis, circa 1981, The Itasca has really cool units, and is quietly located at 1^st St/8^th Ave along River Road. Of the eleven listings this year, none have sold. It’s puzzling. Average list price, $296,000.

Small Buildings (5-49 units, 34 developments)

In the smaller developments in the first half of 2010, the winners are:

Bookmen Stacks – designed by James Dayton, and finished in 2005, “the Stacks” is already iconic in the North Loop (at 4^th St/5^th Ave No). From 45 total units, there have been seven listings this year and five sales. Of the sales, three were developer owned, leaving just one unit remaining until another Downtown condo building is sold out. 2010 average sold price, $422,000.

Herschel Lofts – just off Washington and next door to the North Loop dog park, the Herschel conversion from warehouse to lofts was finished in 2007 and has 47 units. This year they have seen twelve listings and four sales (three sales of developer owned units). 2010 average sold price, $206,000

In the Mill District, Park Avenue Lofts (38 units) and Stone Arch Lofts (36 units) had three sales each, rounding out the winners for Jan-Jun 2010. Average list prices (respectively): $$538,000, $1,150,000.

Of the 34 developments with less than 50 homes, 28 had at least one listing active this year. Of those development with one or more listings, ten have not yet made a sale; nine show one sale; and three others show two sales. Six Quebec and Greenway Gables had the most listings without a sale. Anyone looking for a great home at a great value? I’d look there…

Coming soon to MinneapolisGuy.com – a look at specific condo buildings with a little more depth and perspective. Stay tuned, bat fans.

Importantly:  this data is compiled from the Minneapolis Area Association of Realtors and data from the RMLS (Regional Multiple Listing Service of Minnesota), using the following criteria:
Actively for sale as of June 30, including TNAS
Off market date January 1 thru June 30, including:
  Sold, Comp Sold, Pending, Cancelled, Expired

The big winner is arguably The Bridgewater, built by Shamrock Development, located on Washington Avenue South at 10^th Street. The residence has 282 total units and was completed in 2006. With an easy location just off the freeway which seems to find a lot of new urbanites, the Bridgewater offers good value per square foot, great views of the Metrodome skyline, and better views of the Mississippi and Gold Medal Park.

For more 2010 winners, let’s look at the buildings with the most listing activity – if you’re interested in living in one of these locations, chances are there will always be a decent selection.

Riverwest, Mill District –  56 listings, 14% of total units
Skyscape, Elliot Park  –  46, 18%
Bridgewater, Mill District  –  38, 13%
Riverstation, North Loop – 37, 10%
The Towers, Downtown West – 35, 7%
The Carlyle, Mill District –  30, 12%

Logically, they are the buildings with more units – listed by total 2010 listings, with percentage of listings to total units. Skyscape and Bridgewater each had resale listings sell, but most of the listings & sales were unsold units, exemplifying the few remaining buildings not yet sold out by developers. The good news is all of the new buildings continuing to sell.

Because a condo doesn’t usually sell if it isn’t on the market, those same six buildings have the most sales – listed by # sales, with ratio of sales/total listings (Sold%). If you’re interested in selling, here’s where more buyers made deals.

Skyscape –  23 sales, 50% of listings   (14 sales were unsold units)
Bridgewater –  21, 55%   (14 sales were unsold units)
Riverwest –  19 , 34%
Riverstation – 17, 46%
The Towers – 11, 31%
The Carlyle –  10, 33%

With Skyscape and Bridgewater showing the gaudiest total listing & sold numbers, of note is the $432,000 average sale price at Bridgewater (about 60 remaining units). Skyscape has about 50 remaining units (half are rented), and have an average sold price of $291,000.

Other new construction of note in the first half of 2010 includes:

Phoenix on the River, East Bank – 9 sales, average list price $715,000, 75% sold
  Developer: Schafer Richardson

730 Lofts, North Loop – 6 sales, average sold price $218,000, 95% occupied.  Developer: Schafer Richardson

Harvester Lofts – 6 sales, average sold price $233,000, 90+% occupied.  Developer: Sand Companies

The Carlyle sold out, $535,000 average sold price

The average Sold% in all buildings was 31% (sold units/listings). Buildings with 10 or more listings and above-average Sold% included:

Loring Green West, Loring Park – 7 sales, 13 listings, $245,000 average sold price
Lofts at IMS, near North – 6 sales, 15 listings, $303,000 average sold price
Lindsay Lofts, North Loop – 6 sales, 15 listings, $402,000 average sold price
Herschel Lofts, North Loop – 4 sales, 12 listings, $206,000 average sold price
Loring Way, Loring Park – 4 sales, 12 listings, $162,000 average sold price

Unlike kids in sports today, when there are winners there are also losers. In the Downtown Minneapolis condo market there are a few locations we can consider 2010 first-half losers:

Centre Village, 12 listings, 0 sales, $149,000 average list price
1200 on The Mall, 10 listings, 0 sales, $220,000 average list price
Falls & Pinnacle, 13 listings, 1 sale, $285,000 average list price
801 Washington Lofts, 10 listings, 1 sale, $338,000 average list price
Despite selling 6 units so far in 2010, The Sexton ($90,000 average sold price) continues to struggle finding stability.

More winners and losers in weeks to come – including smaller buildings in the Downtown Minneapolis condo market. .

Importantly:  this data is compiled from the Minneapolis Area Association of Realtors and data from the RMLS (Regional Multiple Listing Service of Minnesota), using the following criteria:
Actively for sale as of June 30, including TNAS
Off market date January 1 thru June 30, including:
  Sold, Comp Sold, Pending, Cancelled, Expired

The Twin Cities metro has endured a fairly volatile market and has started to settle…

We’ve seen the number of foreclosed properties metro-wide continue to rise, then begin to fall…

Short sales have increased…

The local boys of summer have a new playground…

And, having nothing to do with Minneapolis or its many markets, I got married.

Married life is good, and believe it or not, so is the Downtown Minneapolis condo market. (…in the event my lovely wife happens to log on here, the two things are good in VERY different ways.)

The real estate market across the metro can be described best in two words – new normal. Everyone’s getting used to it. The Downtown market can arguably be described in just one – steady.

Regarding the Downtown condo market, here are a couple of numbers to consider:

January thru May, 2007 the area averaged 61 sales per month. January thru May in 2008, 2009 and 2010 averaged 51, 49 and 52 sales respectively.

Have foreclosures and short sales impacted the Downtown condo market? Not really. Behind Edina, the Downtown Minneapolis area has continued to record the fewest lender-mediated transactions in the metro.

Did the tax credit help this year? It seems to have helped a bit – in my opinion bringing more people to market earlier in the year. It wasn’t, however, a feeding frenzy in April as the newspapers were hoping it would be. If activity in May is any indication (eligibility for the tax credit required a contract by April 30), it doesn’t appear Downtown condos were effected: May 2010 saw 51 sales vs. 40 sales in May 2009.

The overall market saw a 30% year-over-year increase in April, and a 30% year-over-year decrease in May.

The average sale price Downtown was $290-300k thru the first five months of the year, which is a bit higher than most first-time buyers were spending this March and April.

Regarding price – relative to our peak in 2004/2005, values are down. They should be. It’s a fairly common belief that we’re currently bouncing around the bottom, have been for a few months, and will be for a few (?) more.

With today being the first official day of summer, it’s worth mentioning that June, July and August have traditionally been pretty good months for Downtown condos. Last year and 2008 saw an average of 61 & 58 sales per month respectively. June this year is looking on pace to continue Downtown’s theme for the past few years – steady. This summer we should see 50-60 sales per month.

Thanks for coming back to Mplsguy.com. I hope to provide the “Condo Winners and Losers thru May 2010” sometime before another 16 months passes.

341
resales (previously owned homes) sold in 2008, a 6% decrease from 363 in 2007

271
newly-built (including conversions) homes sold in 2008, a 35% decrease from 336 sold in 2007

$288,646
average sale price in 2008 of previously owned homes, a 5% decrease from 2007

$398,233
average sale price of new construction homes in 2008, a 13% increase from 2007

$217
average cost per square foot for previously owned homes, down from $222 in 2007

$273
average cost per square foot for new construction in 2007, slightly down from $275 in 2007

57%
percent of all homes sold cost less than $300,000

12
Downtown homes sold over $1 million in 2008

$495
average cost per sq ft for homes over $1 million

28
Downtown homes sold over $750,000, 5.0% of all sales, averaging $443 per sq ft

$69
lowest paid cost per sq ft: @ The Sexton, 1 bd, 1 ba, 1,150 sq ft

$854
highest paid cost per sq ft: @ Stone Arch Lofts, 3 bd, 3 ba, 3,220 sq ft

$70,000
lowest sale price: @ City Heights, 431 sq ft studio

$2.75 million
highest list price sold: @ Stone Arch Lofts, 3 bd, 3 ba, 3,220+ sq ft

183
average cumulative days on market in 2008, up from 164 days in 2007

94.9%
percent of list price received for previously-owned homes, down from 96.2% in 2007

46
average number of homes sold per month in 2008

10.1
months of active resale inventory, known as absorption rate

At the beginning of 2009, there are ninety-five buildings in Downtown Minneapolis with over 8,500 condos, lofts & townhomes finished and livable. The building boom of the past decade has increased the Downtown housing stock by 167% (from 3,200).

Amid gloomy economic and housing news – there’s good news in Downtown Minneapolis: of the sixty or so new residential projects in and around Downtown, over 90% of the units are sold – and still selling.

There were some casualties. By my count, developers scrapped plans for 13 projects and turned two others into rental buildings (2,700 units) – nine of those never even started a sales effort.

There is still hope. Developers have plans for five new projects (approx. 1,800+ units), including big plans near Target Field, North Loop Green, and across the river around the Pillsbury ‘A’ Mill, East Bank Mills.

Winners in 2008:

The biggest winners of the year have to be those developments that…

SOLD OUT! The Groveland: Steven Scott Mgmt, Loring Park, average $338,300 @ $247/ft

                13 resales, average $287,200 @ $238/ft

SOLD OUT! 212 Lofts: Shamrock Development Co., North Loop, average $339,400 @ $182/ft

                3 resales, average $330,900 @ $208/ft

SOLD OUT! Tower Lofts: Tower Lofts LLC, North Loop, average $284,400 @ $210/ft

SOLD OUT! The Falls & Pinnacle: Crescent Heights, East Bank

SOLD OUT! Rock Island Lofts: Shamrock Development Co., North Loop, average $365,000 @ $220/ft

                1  resale, $415,000 @ $206/ft

Not yet sold out, but still selling well:

Bridgewater (Shamrock Development Co., new construction on 10th Ave South @ Washington, Mill District) was the biggest seller of the year with 52 sold homes at an average sale price of $500,450 @ about $284/ft. A convenient, picturesque location and large spaces seem to be a big draw. About 100 remain for sale.

Skyscape (Tandem Development, new construction on Portland @ 10^th, Elliot Park) sold a surprising 30 homes in 2008 (including one resale), $332,000 average price @ $285/ft. Flexibility on price was a successful strategy last year and should help sell out this building in 2009. About 25 units remain for sale, including the viewed-endowed penthouses.

5^th Avenue Lofts (Shamrock Development Co., new construction on 2^nd Street No @ 5^th Ave, North Loop) is looking to sell out since finishing construction in 2005. At one point in 2008, the developer offered $50,000 discounts. It worked – 16 units sold (with 3 additional resales) at an average price of $418,000 @ $227/ft. About 14 units remain.

730 Lofts (Schafer Richardson, new construction on North 4th St, North Loop) is the third of a trilogy of SR buildings near the new ballpark. Closings started in January last year. Twelve units sold in 2008 at an average price of $241,407 @ $263/ft. Under 40 units remain.

Flour Sack Flats (Lupe Development, new construction on 2^nd Street SE @ 5^th Ave SE, East Bank) is nearly sold out, with only a couple units remaining. 2008 saw 11 units sell, average sale price $331,800 @ $274/ft.

A number of projects sold 9-10 units in 2008, including:

Harvester Lofts: Sand Companies, renovated warehouse, North Loop, average $342,900 @ $311/ft

SO+HO: Master Development, renovated warehouse, North Loop, average $224,400 @ $206/ft

Phoenix on the River: Schafer Richardson, new construction, East Bank, average $713,700 @ $390/ft

Honorable mentions for 2008 must include

The Ivy: closings started in 2008! – new construction with Hotel Ivy and Ivy Spa Club on 11^th Street So @ 2^nd Ave So, near Convention Center, average $743,700 @ $417/ft

The Zenith: closings started! – 45 units sold, 20 to go. Shermann & Associates, new construction, Mill District, average $339,900 @ $322/ft

There were grinders in 2008. There were losers in 2008. More on them later.

Small print: All data from Regional Multiple Listing Service of Minnesota

I’ll get to the winners and losers of the year later this week. In the meantime, check out the count.

Before the recent building boom, Downtown Minneapolis had about 3,200 homes in 33 residences. Including new buildings around the downtown core, we now have over 8,500 homes in over 90 residences – and we’re not counting small, 4-10 unit buildings just south of the freeway.

For those who like the idea of living Downtown, there are options.

Here’s what I thought, and how it’s been:

“- There will be more properties for sale than buyers to buy them.”

It wasn’t quite going out on a limb on this one. Yes, there are still more properties on the market than buyers that have come forward this year.

According to Mplsguy.com, there were over 800 condos for sale in February. (source: Mplsguy.com February Condo Count). In the first nine months of 2008, 485 have gone Pending.

August Downtown Minneapolis Coundo Count

“- There will, however, be fewer listings in 2008 – for the 3rd consecutive year.”

Again, not a stretch for this to be true. No new buildings were launched this year, and buyers found great value as they continued to buy inventory.

Resale inventory has been down as well (a really good thing):

1,192 resale listings in 2007

799 resale listings in 2008

“ – We expect the number of sold properties to be flat or a few percentage points above 2007.”

Yes and no.

Through September, more resale condos and lofts sold in 2008 than 2007; 303 and 291 units respectively.

Over the same time, new construction sales have slowed – for one really good reason: with less inventory, there is less choice. The average price paid for a newly-build Downtown Minneapolis condo or loft is not in as many first-time homebuyers’ budget (next predication…).

“- We expect the average price to appreciate modestly (2-3%).”

Yes and no.

Average (mean) sold price of resale listings in 2008 is currently 4.4% lower than 2007; $289,980 in 2008 vs. $303,344 in 2007 for a 1-2 bedroom, 1,280-square-foot Downtown home.

Average (mean) price of a new-construction condo in 2008 is currently 10.8% higher than 2007; $389,094 in 2008 vs. $351,205 in 2007 for a never-lived-in 1-2 bedroom, 1,450-square-foot Downtown home.

“Today’s market conditions favor buyers.”

They did, and still do.

“Two buildings remain under construction, Phoenix on the River and Zenith - accounting for less than 200 homes. The result – fewer new homes added to a bloated but shrinking inventory.”

Phoenix on the River has begun closings, and new residents are living in the new building across the street from the Pillsbury A Mill on the East Bank. The Phoenix is a gorgeous residence that sets a new standard for elegance and luxury. The Zenith, across the street from the Guthrie and Gold Medal Park, and attached to the swanky new aLoft Hotel, will begin closings soon.

“Completed new buildings ready for new owners include 730 Lofts, Harvester Lofts, The Ivy, and Bridgewater Lofts. The result – great selection of never-lived-in homes sold by motivated developers.”

All three buildings are occupied and continuing to sell well. For a bunch of lofts, the three buildings offer a great selection of neighborhood, price, space and style. The Ivy is set to begin closings mid October.

Back in February, I thought this year’s challenges would be negative press, stricter lending guidelines and economic uncertainty. They have been. All three will continue to provide a stiff challenge as we see how the Wall Street rescue actually works.

The things I thought would help the market: continued erosion of record-high inventory.
fewer resale listings, amazingly-low mortgage interest rates, and motivated sellers & developers.

Fewer listings would provide more balance in most markets, but the uncertainty in the market has finally wedged itself into many would-be buyers’ minds. Thus, fewer actual buyers. The good news is that qualified buyers are continuing to take advantage of historically-low interest rates and good value for money from motivated sellers. See above: “Today’s market conditions favor buyers.”

Winners this year have been The Phoenix, Bridgewater Lofts, Skyscape, Harvester Lofts, 730 Lofts, Bookmen Stacks and Flour Sack Flats.

Three buildings have sold out this year: The Groveland, 212 Lofts, and Tower Lofts.

Coming later this year, a reprise to the most-read post on Mplsguy.com:

Downtown Minneapolis Condos and Lofts: 2008 Winners and Losers.

I have faith Congress will do something. And none of us know if it’ll work, whatever it turns out to be. Questions of how many taxpayer dollars to risk, how they’re administered, with what oversight, how much return for the risk, and most importantly – for how much bounce in the polls – are all good things to consider.

Let’s assume Congress answers all of those questions correctly. Then what? The experts who rightfully pin the credit crunch on the problems in the mortgage market have also demonstrated an underlying problem is the current housing market.

The underlying problem in the housing market? Too much inventory, and too much REO inventory.

In today’s real estate market, it’s a painful experience to buy REO property. There are buyers out there trying, but it seems the banks have so much inventory that they don’t know how to sell it. A few recent stories are the best way to illustrate:

A property in St. Louis Park was listed for $155,000. A buyer submitted an offer at list price. The bank countered at $225,000. Not surprisingly, the buyer couldn’t qualify for an additional $70,000. The property is still on the market.

A buyer submitted an offer on a property in Minnetonka. They were told it could be two to four weeks to get a response. After four weeks we called and were told it was in the system, they’d get back to us. Again a couple weeks later, and another week later – continued brush-offs. After ten weeks, the loan officer called and learned that the file had been lost. The buyer was disillusioned and didn’t re-submit. The property is still on the market.

A short-sale listing in Minneapolis home was on the market for 30 days, listed for $325,000. A buyer wrote a low offer, and after negotiations agreed on a sale price of $310,000. After the contract was signed (subject to bank approval), the bank ordered an appraisal. The appraisal came in much higher than the market had agreed to pay – so the bank refused to sell because they have a “rule” that they won’t take an offer less than 95% of appraised value. In this case, they wouldn’t sell the property for less than $345,000 – $20,000 more than the list price. The property is still on the market.

On another short-sale listing in Minneapolis: the bank refused consider a short sale because the homeowner had been paying their mortgage on time. To get out of an unaffordable situation, the homeowner stopped paying the mortgage and listed their home. Along came a buyer, offering less than the bank wanted to accept. The homeowner, after not paying their mortgage for eight months, had plenty of cash on hand and offered $10,000 to their bank on top of the buyer’s offer. Their bank said no. The property is still on the market.

Whether we call new legislation a bailout or a buy-in, it’s my hope someone with power starts to understand what nearly every real estate agent deals with daily: too much foreclosure and short-sale inventory owned or controlled by banks who show no motivation to get it off of their books.

Congress isn’t talking about it. The National Association of Realtors, state Realtor associations, and local Realtor associations are either completely ineffectual or absent.

What’s the next step after Congress spends billions more of our money?

Under the first image was the word perception; under the second, reality. Think of a tie-dyed shirt next to a starched button-down. Rolling Stone and their readers had grown up over the years, and two guys at Fallon conceived hundreds of different pairings to convince advertisers to spend their money there again.

Perception isn’t always reality. Fallon & Rolling Stone did a nice job of illustrating that simple fact.

When it comes to the value of your home, or your neighbor’s condo, a new study shows that perception and reality aren’t always aligned.

From an MPR story yesterday: “The U.S. Census Bureau has released numbers on median home values for 2007. The statistics are part of the American Community Survey, an annual checkup that seeks to present how Americans are living. Usually, census numbers focus on demographic figures and the ethnic makeup of our population. But census researcher also get what are called soft numbers, by asking people what they think about some factors.”

In 2006, the survey showed the median home price in Minneapolis to be about $230,000. Actual sales data showed the homeowner survey to be $7,000 too high. Apparently Minneapolis residents like to read the paper, because amid all the doom & gloom a year later, the 2007 survey numbers showed the median price to be $20,000 less than actual data.

Real estate agents fight a daily battle over value. The majority of sellers really want their home to be worth more than the market is paying currently. Most want to have a great story to tell about how much money they made when they sold. Me too.

Before driving to meet a potential seller after work, real estate professionals like to get prepared. We look at the market: we compare sale prices of similar homes, we compare prices of homes currently on the market, we compare prices of pending sales, and we compare prices of homes that have been rejected by the market. We look at a lot of data to establish a price range where a reasonable (objective) person would expect a home to sell.

A list price is always the homeowner’s choice – the sale price, however, will be limited to what buyer is willing to pay. It can be a difficult conversation when we compare actual data, reality - to a strong belief, perception.

 “I just KNOW it’s worth $245,000,” a homeowner once told me after I presented overwhelming data showing nothing like it sold for more than $210,000 in the previous 12 months. (They insisted on over-pricing the home, and it didn’t garner any offers.)

If you plan to sell, please consider the data provided by a Realtor. Interview more than one. Good agents are selling homes now, have a feel for the market, and can help with the difference between perception and reality.