Minneapolis single-family home permits on the rise | Finance ...

Rising fuel costs and a desire to live in a convenient location are among the factors driving demand for new homes in Minneapolis, such as this one on 37th Avenue South. (STAFF PHOTO: BILL KLOTZ)

A quest for shorter commutes key reason

Minneapolis is no Woodbury when it comes to putting up large numbers of single-family homes, but those projects are quietly making a comeback in the big city.

So far this year, Minneapolis has issued permits for a record 3,530 housing units, with big multifamily projects accounting for most of the activity. But a surprising number of white picket fence offerings are also going up.

Minneapolis has issued permits for 74 single-family homes through November, which outpaces the year-to-date total for single-family construction in emerging suburbs like Farmington, Andover, Rogers and St. Michael.

?Generally speaking, what you are seeing is a renewed sense of confidence in single-family homeownership,? said Tom Streitz, director of housing policy and development for the city of Minneapolis.

The trend in Minneapolis is consistent with what?s happening in established suburbs like Edina, Bloomington and Richfield where older homes in desirable parts of town are coming down to make way for new offerings.

JMS Custom Homes in Edina has built a few such houses in southwest Minneapolis, butting up against Edina and St. Louis Park, an area that?s in ?very high demand,? according to owner Jeff Schoenwetter.

A number of things are driving that demand, Schoenwetter said, including rising fuel costs and a desire to live in a new home in a convenient location.

?People are saying, ?I only make so much money; I would rather allocate a little more to a nice home close in and a little less to burn fossil fuels,? Schoenwetter said.

Schoenwetter said the homes themselves are smaller than the ?McMansions? that were popular in the previous decade, but they have attractive features like theater rooms and ?amenity-rich kitchens,? he said.

?There seems to be a strong return to value,? he added.

Streitz also sees migration back to the urban core.

Baby boomers are selling their homes in the suburbs to be closer to downtown, younger college grads are looking for an urban lifestyle, and others want to move closer in because they?re tired of commuting, he said.

?I think it?s all those factors and more, probably,? he said.

Minneapolis is still far behind some of the suburban leaders in single-family home construction.

Blaine (334 permits for 366 planned units), Lakeville (224 permits, 327 units), Plymouth (227 permits, 238 units), Maple Grove (178 permits, 282 units), and Woodbury (239 permits, 286 units) are among the metro area?s 2012 hot spots for single-family stock, according to the Keystone Report.

But single-family numbers for Minneapolis compare favorably to other emerging suburbs like Rogers (71 permits, 71 units), Victoria (48 permits, 62 units), Waconia (71 permits, 71 units), Farmington (69 permits, 69 units), Andover (67 permits, 67 units) and Ham Lake (54 permits, 54 units), according to Keystone.

In Minneapolis, higher-end houses are going up in stronger market areas, like the southwest, where people are tearing down older homes to make way for new structures, Streitz said.

More than half of the 21 single-family dwellings permitted in Minneapolis in the third quarter of 2012 were in the southwest area near Lake Calhoun and Lake Harriet, according to Minneapolis Trends, a quarterly publication published by the city?s Community Planning and Economic Development department.

But Streitz said the north side is also seeing some homebuilding.

Most notably, as part of an effort to stimulate new housing production, the city recently launched the Green Homes North program, which calls for 100 new energy-efficient homes on city-owned vacant lots on the north side over the next five years.

The city?s Community Planning and Economic Development department contributed $1 million in 2012 for the program, which helps developers cover ?gap financing,? or the difference between the cost of new home construction and the price the homes can command in the current market.

Other funding partners include the Minnesota Housing Finance Agency and the Family Housing Fund. Loans with interest rates of 2 percent to 3 percent are available from the Twin Cities Community Land Bank, according to the city.

Five developers ? Project for Pride in Living, PRG Inc., Greater Minneapolis Housing Corp., Habitat for Humanity, and TVM Development ? have received a total of $661,475 in 2012 Green Homes grants, according to the city?s Green Homes North Web page.

New homes rising in north Minneapolis are selling in the $150,000 to $180,000 price range, and the homes in the southwest market typically range from $400,000 to $800,000, Streitz said.

Schoenwetter, a past president of the Builders Association of the Twin Cities, expects housing redevelopment in the core cities to have some staying power.

?I don?t think it?s a flash in the pan,? he said. ?I think it?s the real deal and I think it will continue.?

This entry was posted on Wednesday, December 5th, 2012 at 7:30 am and is filed under Construction & Development. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

Source: http://finance-commerce.com/2012/12/minneapolis-single-family-home-permits-on-the-rise/

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