The Saint Paul Condo Blog

And when I say paper, I mean the Pioneer Press of course (is there another paper?).

Yours truly is quoted in the business section about the extremes in the real estate market.  Christopher Snowbeck has been chatting with me for the last few weeks about what's happening in the market and last Wednesday, they tagged along for a showing I was on.  Always fun to be in the paper, especially when the pictures make me so darn good!

I've been thinking about this question a lot lately, and I think I've put together a good list for discussion.

Rentals

It's no secret that our real estate market is down from the highs of 2006-7, the same time when Downtown saw an explosion of new residents.  As we begin to enter that 3-5 year move cycle as we've seen in the past, these new owners are now stuck.  Some are losing their condos to foreclosure, some are selling "short", while others have decided to wait it out.  Then there are those who need to move on, but don't want to damage their credit.  This is why we are starting to see more rentals in condo buildings.  Not all of the buildings in downtown allow rentals, but for those that do, the HOA (Home Owners Association) will need to start making some decisions on how to best manage the increased amount of rental in the building.

Renters sometimes get vilified in condominiums, as the easy scapegoat for all the perils in the building.  I've seen some home owners act just as bad, if not worse than some renters.  But I'd say for the most part, a high percentage of renters are not good for a condo building.  They just don't have the same vested interest as home owners do.

The knee-jerk reaction to increased rentals is to outright ban them, and in my opinion that's the worst decision a HOA can make.  It's one thing if the building you bought into had always banned rentals, you bought it know that.  Others will add a certain percentage that caps the amount of rentals in a building.  This too is problematic.  What happens when you've reached the cap?  It's like banning rentals, now you will get home owners desperate to get out, pleading at board meetings to allow their place to be rented.  Then does the board cherry pick units that will be allowed to rent?  Or will they tell the home owner who wants out they are out of luck?

In my opinion, the best option is for a hefty move-in fee.  It's applied equally to home owners and renters, but if the dollar amount is high enough, renters won't pay it, and the home owner will have to chip in.  This will then make the seller think twice if this is the best possible solution.

Foreclosures

Foreclosures are tough on a HOA in a few aspects.  First, the loss of income to the building.  When a home owner defaults on their mortgage, most forgo paying the association as well.  If enough units in a building are in default, it can effect cash flow.  Second, When the bank takes over, the HOA only gets a portion of the owed money.  Usually just what's is owed AFTER the sheriffs sale.  Third, when the foreclosed home finally sells to a new owner, it usually has a shiny new low price - further dragging down values in the building.

My only advice to condo associations is to not foreclose on liens that are filed on the association's behalf.

Financing

If you remember the title of this post, you might be wondering why I've included financing in the list of challenges facing condo associations.  It's because most of these condo building could do a little leg work and get their HOA approved for FHA financing.  It would be a huge step in the right direction to ease the burden facing buyers.  Which in turn would allow more potential sellers to sell!

Capital Improvements

It's a tough time to spend money as a fiscally responsible home owners association, but if you let your building slip, the buyers won't come.  How long has it been since the lobby has been refreshed?  How about the halls?  Just as a buyer is turned off with a condo that hasn't been remodeled in 15 years, buyers are turned off when they walk into a dated building.  Always having salability on the radar will help immensely with property values and owners pride.

What do you think is a pressing issue in the coming year for condo associations?  Let's discuss below.

Two parts of juicy gossip for you...  First off, I hear that the idea of a hotel is not exactly off the plate.  They may be leaving room on the site for a second phase!  When the condos went away, I really liked the idea of a mixed use site, with the Hotel, apartments, and Lund's.  So when I heard a while back that the hotel had dropped out, I was pretty bummed.

The second bit of news is about the Section 106 process the Penfield was going through.  It's my understanding that the the parties have signed off on an agreement on how much of the Public Safety Building would be saved along Minnesota.  If I were placing bets, I'd say it's two bays back.

Once I can get more info on the outcome, I'll post up a new rumor report.

Information contained in this post is gathered from multiple sources, some of whom wish to remain anonymous. At times, I have to bridge the gap of information and make assumptions to make the post work. I do my best to fact check, but remember I am a realtor not a reporter.

So it's late and I decided to poke a little fun at the Billion Dollar gorilla trying to come downtown.

I was half way through a blog post about how Obama's 2011 budget includes a teaser $45 million check, when news broke that MPR (Minnesota Public Radio) was planning on suing has Met Council over the LRT's run down Cedar Street (Battle of the M's, get it?).  At heart is how to reduce vibrations in front of their studio on Cedar and 7th Street.  Met Council wants to lay a rubber mat under the tracks, and MPR wants steel springs under the tracks.

As a bystander in the dispute, I still don't really understand how the trains could cause so much vibration that it would make their studio unusable.  How does the vibration of a semi-truck rumbling down the street, or a snow plow shaving the street clean, or a fire truck in full sirens blaring responding to a call effect their studio?

The cynic in me asks, "Did MPR know they were building a studio in an urban environment?"  I mean this isn't exactly the same area as Paisley Park.

If I were a betting man, I'd bet that MPR wins this battle, but it's unfortunate that it has to come to this.

EDITED 2/4/2010 - MPR has now filed a lawsuit. 

One step closer!

Wow, what a year!

As promised, I told you I'd crunch the numbers and there are sure some interesting statistics.

First off, the fun nuggets...

There were no sales (as reported by NorthstarMLS, Inc.) in the following buildings:

Chicago Great Western (2006 was the last reported sale and will be for the foreseeable future)
College Hill (2006 was the last reported sale)
John Matheis House (2007 was the last reported sale)
LOT270 (this one was a bit of a shocker, but the development did sell it's last home in 2008)
Park Tower (Since 2000, there have been only 7 reported sales)

When I weed out the properties that shouldn't be listed in downtown, and narrow the list to just the condos in the directory, I come up with a downtown median price of $180,000 and a median size of 1,054sf - which gives us a median Price per Square Feet (PSF for short) of $171psf.

The median price for downtown dropped a bit, down 9.95%.  The PSF fared better, but still down 6.03% 

Top Four buildings based on Median Price increase

1. Mississippi Flats - 66% increase*
2. MarketHouse - 8% increase
3. City Walk - 4% increase
4. Pointe of St Paul - 3% increase

Top Four buildings based on Median Price decrease

1. Gallery Tower - -36% decrease
2. Rossmor - -34% decrease
3. Printers Row - -33% decrease
4. Ninth Street Lofts - -27% decrease

Top Four buildings based on Median Price per Square Foot increase

1. The Pointe - 31% increase
2. Mississippi Flats - 12% increase*
3. Rossmor - 9% increase
4. City Walk - 3% increase

Top Four buildings based on Median Price per Square Foot decrease

1. MarketHouse - -28% decrease
2. Gallery Tower - -24% decrease
3. Printers Row - -21% decrease
4. River Park Lofts - -9% decrease

From looking at the data, one can make a few assumptions.  Median price in a condo means very little on its own.  With the addition of Median size, you can calculate the price per square footage of a condo/loft and get a good snap shot of the value.

Know that smaller units will generally have a higher PSF (price per square feet) than larger units in the same building.  PSF isn't the holy grail either.  There is a lot that can alter the value of a home.  What floor is the unit on?  What view?  Upgrades? - You get the picture.

The data can give someone false impressions at times, and this is where I step in.  If you have questions about a building, it's values, etc...  I'm always willing to chat.

In the coming days, I'll update each condo page with the new 2009 data.  I'm also working on data mining past years.  I've currently got a good breakdown back to 2007, but I want to go back to 2000, kind of the start of the renaissance for Downtown.

*Mississippi Flats is a newer condo development this is finishing out the sales in the building
NOTE - I decided to exclude buildings that only had one sale during the course of the year.

I've decided to handle news and rumors coming from the Penfield project just a little bit different than most development news and reports.  Since the developers are pretty tight-lipped as of late, some of the info I am receiving is a bit "off-the-cuff"

So it seems only fitting to style it in the Restaurant Rumors Report posts.

Here’s my preamble that will accompany all future Rumor Reports posts.

Information contained in this post is gathered from multiple sources, some of whom wish to remain anonymous.  At times, I have to bridge the gap of information and make assumptions to make the post work.  I do my best to fact check, but remember I am a realtor not a reporter. 

With that, let the gossip begin.

Like I said above, with the Penfield being mum on the development, I decided to do some digging.  I found some gems in the trash of the Met Council building (kidding, kidding – meeting minutes online).  The Community Development Committee has awarded a Livable Communities Demonstration Account (LCDA) grant in the amount of $610,000.  The award will now go before the full board of Met Council for approval.  From what I understand, it’s got a good chance of getting approved this month.

On another front, after planting a bug at the Mayor’s office (you know that’s a joke too, right?), I hear the developers and the Minnesota Historic Preservation Commission are close to finishing a Mitigation Agreement (MA) over the partial removal of the old Public Safety Building.   Once the MA is finalized, it will allow the developers to submit their project to HUD for Mortgage Insurance approval.  That seems to be the golden ticket, as really what bank wants to loan millions of dollars to a real estate development right now?  This way, you-me-and every other tax payer is taking the risk on the development and not the bank issuing the loan (makes sense right?).  If everything shakes out like planned, the project should be shovel ready by Summer 2010.

And finally, it’s my understanding that the Lund’s as part of the development is still alive and well.  Again, from what I understand, the contract between Lund’s and the Developer has a end of year deadline for the Penfield to hand over the raw space to Lund’s no later than the end of the year, 2011.  Judging my the above timeline it looks tight when you consider a Summer start time, but Lund’s will be doing the build-out, and not the developers.  So maybe construction of the tower will be going on while the Lund’s gets built out.

Hopefully there will be an official statement from the Developers soon, until then I keep my 80's Spy Tech kit handy.