John Murphy’s MEDINA REAL ESTATE REPORT

The Minneapolis Area Association of Realtors just published data through July for 100+ cities across the metro.  If you haven’t looked at this information, it’s absolutely fantastic what Jeff Allen is doing at the association.  Check out the 100 here.

Medina is showing the following:

Average Sales Price: $734,051 down 10.3%

# New Listings: down 9.2%

Days on Market: 236 up 48%!

There are still 26 homes over $1,000,000 listed for sale in Medina as I publish this.

Linked below is the Medina Speed Study letter from the Hennepin County Transportation Department regarding the MnDOT study for County Road 116 between Highway 55 and Hackamore.

Traffic will be slowed down to 30 MPH about 300 feet north of Clydedale. While this isn’t a huge reduction, it does seem like it will slow traffic down somewhat.

Any questions about this report should be directed to Chad Adams, Medina City Administrator rather than to MnDOT or Hennepin County. Chad can be reached at 763-473-4643.

Medina Speed Study Letter

The National Association of Home Builders reported housing starts this week for the month of April 2008:

Single-family housing starts dropped 1.7 percent for the month to a seasonally adjusted annual rate of 692,000 units, the lowest monthly production rate since January 1991 and 42.2 percent below April 2007.

I remember seeing on Yahoo! the positive news story about housing starts being up, but when you look under the hood at the statistics and the details of the release from the NAHB, you see that the multi-family starts overly influenced the report. The fact is, across the country, demand for single family homes remains soft and the builders remain pessimistic about their futures - see graphical display below courtesy of Calculated Risk.

Locally here in the Twin Cities and particularly the western suburbs, while business is certainly softer than many builders would like to see, I am seeing some encouraging activity in new developments such as Prominence Woods (Maple Grove, MN - Wayzata Schools), Taryn Hills (Plymouth, MN - Wayzata Schools) and Bridgewater at Lake Medina (Medina, MN - Wayzata Schools). Several spec homes have recently gone pending meaning someone has purchased the home but it has not closed yet.

I am to be chided for not publishing this information sooner.  The Minneapolis Area Association of Realtors published this information 2-3 weeks ago.

Click here for the pdf comparing 2007 to 2006.

The average sales price for a home in Medina remained essentially unchanged for 2007 to $787,117.

Days on Market stood at 153 days until a home received a contract.

Based upon what sold in the MLS, 2007 was not a good year to be selling lots and land in Medina.  Only one lot sold in Medina in 2007.  That was 20 acres that sold for $750,000.

In 2006, 7 lots had sold for a total of $5,752,000.  If you back out the small single family lot that sold at 2933 Ardmore for $164,000 for a .34 acre lot, that leaves a total of 6 parcels that sold for $5,588,000 representing 70.2 acres.  That amounted to $79,601 per acre.

The fact of the matter is in looking at this data, if you wanted a decent sized lot for your country home in Medina, you were looking at approximately $90,000 - $100,000 per acre in 2006 and in general it would cost you close to $1,000,000 to buy such an acreage lot.

Given the slowdown that occured in 2007, it’s difficult to know what the true cost of an acreage lot is today, but there was one sale as mentioned above for 20 acres and $750,000.  I believe the more important thing to look at in this sale is not the $37,500 per acre, but rather the amount of $750,000.  The reason I say that is that in looking at past history, larger lots in Medina have gone for between $900,000 - $1,200,000 for anywhere between 10 - 20 acre lots.  The key is the overall price of the lot more so than the price per acre.  Some have historically paid close to $100,000 per acre for the smaller parcels and $50,000 to $60,000 per acre for the larger parcels (i.e. 20+ acres).

Here are the list of active lots and land for sale in Medina as of January 18, 2008.

2930 Parkview Drive, Medina, MN is the featured home to be auctioned at the Twin Cities new construction auction scheduled for January 26-27th.

They say the home as a value of $2.5 million.  I’ve been it in.  It’s a nice home with about 4,700 total finished square feet.   It’s located directly across from Baker Park in Medina.  It’s beautiful county out there.  The views are awesome of the sunset and sunrise as this home sits on a hill.  It also has views of School Lake in Medina.  The lot is 6.5 acres.  There is an additional 24 acre, buildable lot that someone could purchase as well.

United Properties is getting ready to develop the 3.4 acre parcel on the southwest corner of Highway 55 and Sioux Drive in Hamel, MN.  It looks like there will be a credit union along with a coffee shop and room for a small professional services office or perhaps some retail.  The word is Starbuck’s will open a store in this development.

United Properties has an excellent web site describing the plans complete with the site plans, traffic numbers, demographics etc.  Click here to see all the details.

For some reason I never posted this story written by BusinessWeek that ran in 2006, but it’s worth a read today especially given the National Association of Realtors study of what home buyers are looking for in 2007…oversized garages was at the top of that list! See my earlier post about the trend toward larger garages.

If you’re looking for a home in Medina that has one of these super garages, you have to consider my listing at 4085 Shorewood Trail in Foxberry Farms. It’s listed for $1,070,000. This home has a spectacular 5 car garage which includes:

• Insulated and heated
• Room for 5 cars
• Oversized garage doors
• Hot water
• Cable TV
• Telephone
• Epoxy floors
• Stairs to the lower level utility room
• 1400 square feet in the garage
• 10′ ceiling height

If you’re looking for a home to go along with the garage, this would be it. It has 5500 finished square feet with 5 bedrooms, 4 baths and is located in a cul-de-sac in Foxberry Farms.

The Star Tribune ran this story yesterday about the proposed tax increases in Medina in order to pay for some roads.  Mayor Tom Crosby appears to be advocating a pay-as-you-go method to pay for the roads.  Traditionally, capital improvements such as roads have been paid for by bonds issued by the city.   That spreads the cost out over 20-30 years which I believe is the best way to pay for such items.

Hopefully the City Council will change their position and pay for these items by bonding instead of pay-as-you-go.

“What goes up, must come down: thoughts about the residential real estate market through 2010″ is one of the more lucid articles I’ve read about the state of the Twin Cities real estate market. The article was written by Chris Galler, SVP for the Minnesota Association of Realtors (MAR). The Minnesota Association of Realtors has done an excellent job of trying to prepare agents for the coming changes in Minnesota real estate. They have always spoken honestly about the challenges facing the local real estate market.

We all know about the rising supply of houses for sale due to overbuilding, low interest rates, and lax lending standards. What most people don’t realize is that part of the slowdown we are currently feeling is in part due to a major demographic shift that is afoot right now in the State of Minnesota. There is real concern that there aren’t enough young people coming up to buy the homes from the baby boomers. Add to that the rapid aging of the population and one has to realize that the tide has turned in Minnesota.

The housing stock has essentially been built for married couples with children. However, that category of buyer is a dying breed in many ways. There will be a rapid rise in households without children. They may include a married couple without children or a single mom, single dad or single person. Those buyers aren’t likely going to be interested in the 4,000 - 5,000 square foot two story often found in today’s suburbs. As a result, I believe we will continue to see ongoing pricing pressure for many of these bigger suburban homes for years to come.

There will be cities that will handle this demographic change better than others. For example, it’s my opinion that cities such as Maple Grove and Medina will continue to attact the traditional married couple with children who are looking for the traditional two story home in a nice neighborhood with good schools, amenities and services. In the case of Maple Grove, they are also making sure they have housing to meet the needs of the various households that are being formed today and they have an excellent span of housing options for people.

While we are currently down about 4.5% in prices this year and quite possibly will be down another 5% in 2008, no one that I know of is predicting a big drop in home prices here in Minnesota. That being said, sellers need to be aware of the fact that the market is not likely to bail them out of their home any time soon given the shifts that are taking place demographically in Minnesota.