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Business Valuation, Development, Investment Real Estate

Do you need some leisure time?

Last week the Minnesota Business Journal reported, Lutsen Resort, a staple of Minnesota tourism for over 125 years, went on the market for just under 10 million dollars. However, it is not the first resort in the Great North to go on the market recently. The Star Tribune reports Gunflint Lodge sold for over 6 million dollars and Superior Shores and Resort, just south of Lutsen, in Two Harbors is also currently on the market.

Is this a trend? Why are resorts going on the market? Should consumers be worried about their options for North Shore leisure?

Herb Tousley, of the University of St. Thomas’ Shenehon Center for Real Estate, commented that these resorts often times require a “hands-on”  approach to management of the site. He also noted, “due to this approach, many owners see the opportunity to sell, in what they perceive to be, a high value market in order to exit the business.”

Statistics from the U.S. Travel Association show that domestic leisure travel is up from 2 billion trips in 2007 to 2.28 billion trips reported in 2016. More specifically, the Minnesota average household income has returned to pre-recession levels at $79,893. The private sector employment numbers (FRED) also seem to indicate the economy is in relatively good health. These indicators are great for resorts and the hospitality industry in general. Even with the ominous question of, “are we due for an economic adjustment?” It is not a predictable event. From general market signs, a resort may be an investment for some leisure.

 

Shenehon Center for Real Estate has been enabled Graduate level Business and an Undergraduate Major program in real estate for more than 15 years. The University of St. Thomas is dedicated to creating leaders who are morally responsible, think critically, act wisely, and work skillfully to advance the common good. 

 

 

Affordable Housing, Development, Home Prices, Housing, Housing Trends, Industry News, Residential Real Estate

Ten Surprising Facts: State of the Nation’s Housing Report

Since the housing bubble burst in 2008, the market has seen an increase in demand for homes, but home inventories remain stagnant. Further, either from the bank restrictions or consumer caution new home growth has been at record lows for the last 10 years. Whether this is just a trend or due to socio-economic reasons can be debated, but statistics do show Millenials are living with their parents longer and seem to be putting off buying homes due to a different economic situation than previous generations at the same age (US Census).

Further a recent housing report by Joint Center for Housing Studies of Harvard University, posit similar statistics in the market strengthening the argument that Millenials and uncertainty are holding down the housing market.

1. For-sale inventories dropped even lower over the past year.

For the fourth year in a row, the inventory of homes for sale across the US not only failed to recover, but dropped yet again. At the end of 2016 there were an historically low 1.65 million homes for sale nationwide, which at the current sales rate was just 3.6 months of supply – almost half of the 6.0 months level that is considered a balanced market.

2. Fewer homes were built over the last 10 years than any 10-year period in recent history.

Even with the recent recovery in both single-family and multifamily construction, markets nationwide are still feeling the effects of the deep and extended decline in housing construction. Over the past 10 years, just 9 million new housing units were completed and added to the housing stock. This was the lowest 10-year period on records dating back to the 1970s, and far below the 14 and 15 million units averaged over the 1980s and 1990s.

Read more of the Full Article or go straight to the full Housing Report by Joint Center for Housing Studies of Harvard University

 

Architecture & Design, Commercial Real Estate, Development, Property Management

History of the Empire State Building: A Financial Flop for Nearly 20 years

By QuickLiquidity | Date: June 13, 2017 | Category: History

In the late-1920s, New York’s economy was booming and a competition to build the world’s tallest building was heating up. One man who was at the center of it all was Walter Chrysler of the Chrysler Corporation, who wanted to build the world’s tallest building as a monument to himself and American capitalism. Chrysler began construction of his monument, the Chrysler Building in 1928 at 405 Lexington Avenue. Despite the buildings name, the Chrysler Corporation did not pay for the construction of the building and never owned it. Instead Chrysler paid for it himself, with the hope of his children one day inheriting the world’s tallest building.

The architects of a competing building, 40 Wall Street, had devised a plan to prevent the Chrysler Building from ever becoming the world’s tallest building. Seeking the title for themselves, they planned 40 Wall Street to be 925 feet tall: 85 feet taller than the Chrysler Building had originally planned to be. When Chrysler found out about 40 Wall Street’s plans he decided to add a surprise 186-foot spire to his building. 40 Wall Street finished construction first in April of 1930, and held a celebration for being the tallest building in the world, without knowing that they were about to be surpassed. Less then two months later, the construction workers at the Chrysler Building hoisted 4 parts of the secret spire to the top and riveted them together in 90 minutes. At 1,046 feet high, the Chrysler Building became the world’s tallest building¹.

John J. Raskob of General Motors, a rival of Chryslers, also aspired to build the world’s tallest building. Raskob purchased 350 Fifth Avenue and began construction of the Empire State Building in March of 1930, only a few months before the Chrysler Building was completed. Raskob hired architect William F. Lamb, who finished the original drawings for the Empire State Building in only two weeks. In one of their first meetings Raskob had taken a jumbo pencil, stood it on its end and asked Lamb, “Bill, how high can you make it so that it won’t fall down?” Using over 3,400 laborers a day, the building went up in just over a year, well ahead of schedule and under budget at $40 million, which would be nearly $600 million today. During certain periods of construction, the frame grew a remarkable four-and-a-half stories a week. Not to be bested by the Chrysler Building, Raskob put the final cherry at the top of his building – a spire, making the Empire State Building a soaring 102 stories and 1,250 feet high. The Empire State Building was completed in May of 1931 and became the world’s tallest building, a title it would hold for nearly 40 years until the World Trade Center was completed in 1970. While successful in beating the Chrysler Building in height, the Empire State Building was far from being the success Raskob had hoped.

 

Full Article: http://www.quickliquidity.com/blog/history-of-the-empire-state-building-a-financial-flop-for-nearly-20-years.html

Architecture & Design, Commercial Real Estate, Development, Real Estate Trends

Minnesota: Commercial Development Hub

A recent post by the New York Times blog, shows Minneapolis is among the leaders in urban development. One may ask, why and how does Minneapolis keep attracting people to the city? Simple, the city’s diverse population allows for vibrant restaurants and events, and municipal transportation creates accessibility to and from these destinations. Looking deeper, destinations and even housing were only possible through recent Minneapolis commercial development. You can see from almost any point in the city a construction crane or sign saying, “Opening Soon.”

Setting aside apartment and condo developments, the last 15 years has seen revitalization of major Minneapolis buildings. The old Sears building on Lake Street is now the Midtown Global Market which hosts over 1.5 million visitors a year, and the Foshay Tower is now the W-Hotel. Recently, the Minneapolis Armory, also on the national landmark registrar, looks to be renovated into a venue hosting large crowds as an event center. The Armory was recently sold for $6 million dollars to Nedal Yusuf Abul-Hajj who has submitted plans to convert the 80 year old building.

Architecture & Design, Commercial Lending, Commercial Real Estate, Development, Housing Trends

Finance & Commerce: Will Minnesota law change revive condo development?

Original Article

Date: June 7th, 2017

By: Brian Johnson

 

A change in Minnesota law that makes it more difficult for homeowner associations to sue over construction defect claims may or may not revive condominium and townhome construction. But builders, developers and real estate agents who pushed for the change say it’s a good start.

House File 1538, signed by Gov. Mark Dayton last week, requires homeowner associations to implement a preventive maintenance plan, go through mediation, and get the majority of association members on board before they can proceed with a construction defect lawsuit.

“None of us have a crystal ball as to whether any of this will change the market,” said Ryan Hamilton, associate legal counsel for the Minnesota Association of Realtors, which supported the bill. “It is an effort to improve the risk environment. We hope it does that.”

Builders and developers have been clinging to that hope for a while. In recent years, they have been hesitant to move forward with condo and townhome developments for fear of litigation, despite growing demand for such homes. Another barrier: Some still feel the sting of the condo bust in the previous decade, and the lenders do, too.

As Finance & Commerce has reported, state law allows a condo owner or association to sue project teams for “major construction defects” for up to 10 years after the unit or building was completed. The law was amended in 2010 to add commercial contractors to the list of liable partners. That 10-year statute still applies, said Minneapolis attorney Peter Coyle, who worked with the Housing Options Coalition.

Homebuilding has been on the upswing overall. More than 7,600 new multifamily units were added in the seven-county metro area in 2015, up from 2,329 in 2007, according to the Housing Options Coalition, which pushed for the new law. Coalition members include the Minneapolis Downtown Council, the Associated General Contractors of Minnesota, the Builders Association of the Twin Cities and the Minnesota Association of Realtors.

But because of the liability issue, condos and townhomes represent a much smaller share of new housing units. Two years ago, 3 percent of new multifamily units were condos and townhomes, down from 23 percent in 2007, the coalition said.

Speaking to the demand side, Herb Tousley of the University of St. Thomas points specifically to downtown Minneapolis and the city’s North Loop.

Demand is solid for condos there, but “hardly any” units are for sale, said Tousley, director of real estate programs at St. Thomas. Still, he noted new ones are coming online, including developer Jim Stanton’s 374-unit Legacy Condos project at 121 12th Ave. S. in the Mill District of Minneapolis.

“I think you will see people moving in to fill that supply,” he predicted.

Abbey Bryduck, legislative director for AGC-Minnesota, hopes the change will encourage more development. In particular, the preventive maintenance requirement “goes a long way in making sure these buildings are maintained properly,” she said.

The bill, which was approved by a wide margin in the Legislature, had a Republican author in the House and a DFL author in the Senate.

Despite the bipartisan support, some language in the bill, including the requirement to get the majority of condo owners on board with a lawsuit, gives pause to David Hellmuth, an Edina attorney who represents homeowner associations.

Hellmuth said the requirement puts an “unnecessary restriction” on the association when legitimate claims need to be addressed.

A typical defense against construction defect claims is that the association didn’t do enough preventive maintenance. In other words defendants claim the association “caused their own problems,” he said.

“Whether or not that is true is debatable,” Hellmuth said.

Even so, housing industry advocates like David Siegel of the Builders Association of the Twin Cities expect to see more condo and townhome projects sprout up in the metro area and across the state with the changes in effect.

How far has townhome ownership declined?

A number of years ago, BATC held an event that showcased townhomes, condominiums and other for-sale multifamily properties. “We could not do any such thing today,” Siegel said, because the options are too limited.

“I think this legislation will lead to more condo development, and will similarly result in more townhome construction,” Siegel added.

The Builders Association of Minnesota also supported the legislation, said Remi Stone, BAM”s executive vice president.

Stone said it “improves the landscape” for builders and developers looking to produce condos and townhomes, which appeal to younger buyers just entering the market as well as empty-nesters. That goes for markets such as Rochester, St. Cloud and Duluth, as well as the Twin Cities, she said.

Stone hopes the statute changes will spur more development. “This is one feature,” she said. “We still have issues of financing, we still have regulatory costs. But there is demand. And where there’s demand, the market will go.”

Architecture & Design, Development, Twin Cities Real Estate, Urban Planning

Former Washburn-McReavy Funeral Home Development Remains Postponed

If you take a leisurely drive east over the 3rd Street bridge, you will see a familiar building. Familiar in the sense, the building is 90 years old. Your grandparents likely could have seen it as children. However, today unlike 90 years ago, fences surround the building with visible graffiti and construction equipment. It is the sight of one of many development projects in historic Northeast Minneapolis. 

The plan for the 90 year old building, previously occupied by Washburn-McReavy funeral home, was demolition to make way for a 40 story high rise. The project thus far is similar to the redevelopment efforts of Nye’s Polonaise which occupied the historic Harness shop and 112 Hennepin building. The Nye’s Polonaise project originally planned a high rise building, but in the end scrapped 24 of the original 30 floors to accommodate the neighborhood and Heritage Preservation Commission.

While it is not the same building as Nye’s, the project has been postponed now for almost a year. It will be interesting to see what happens, but recent history and potential project pressures may indicate serious alterations to the original plans.

 

http://www.bizjournals.com/twincities/news/2017/05/31/court-blocks-teardown-for-alatus-40-story-condo.html

 

Commercial Real Estate, Development, Economics, Executive Insight Series, Housing, Industry News, Investment Real Estate, Real Estate Programs, Real Estate Trends, Think Outside The Box, Twin Cities Real Estate, Upcoming UST Events

Real Estate Executive Insight Speaker Series Bob Lux – Inside the Mind of A Developer

 

Real Estate Executive Insight Series

Bob Lux – Inside the Mind of A Developer 

Event Details Tuesday, March 28th 2017 5:30 p.m. University of St. Thomas, Minneapolis Campus Schulze Hall, Room 127

A candid conversation with industry leader Bob Lux, Founder Alatus LLC

Quality real estate development requires innovative thinking. Bob Lux, founder of Alatus LLC, has been in the real estate development and investment business for over 30 years. His company’s mission is to provide innovative solutions and high quality projects by wisely using his team’s talents and strengths to achieve the client’s vision and form a better community.   Lux will discuss the challenges, opportunities and trends in developing residential and commercial real estate in the Twin Cities. Lux will also share his views on the condo market and as the largest private owner of parking facilities in Minnesota Bob will outline his expectations for future parking and infrastructure needs in the downtown area.

Agenda 5:30-6 p.m. Networking 6-7 p.m. Presentation by Bob Lux

Register Today
 
Development, Economics, Home Prices, Housing, Housing Trends, Minneapolis / St. Paul Housing, Real Estate Trends, Residential Real Estate, Twin Cities Real Estate

Survey of Twin Cities’ home builders finds them in a slightly more optimistic mood than six months ago

The composite score of this new forecasting tool increased slightly, but there were more significant changes found in the six individual questions that St. Thomas asked industry leaders.

Leaders in the Twin Cities single-family-home-construction industry were “slightly less pessimistic” about market conditions in June than they were last December. That’s according to a survey conducted by the University of St. Thomas Shenehon Center for Real Estate in partnership with the Builders Association of the Twin Cities (BATC). Last December’s survey produced a composite index of 45. The second survey, conducted in June 2016, produced a slightly more optimistic 46. The Twin Cities Home Builders Survey is patterned after St. Thomas’ Minnesota Commercial Real Estate Survey that began in 2010. The home builders survey polls the same panel of 35 industry leaders every six months about their expectations in six key areas of the housing market one year in the future.  The first survey was conducted in December 2015.

“The participants were strongly optimistic in their expectation of increasing sale prices per square foot and the number of single-family housing starts, and they were moderately optimistic about an increase in availability of finished lots in the coming year,” said Herb Tousley, director of Real Estate Programs at the University of St. Thomas. “However, the expectation of increasing land prices and a belief that the cost of building materials will increase over the next year was a cause for concern that tempered the composite index,” according to David Siegel, executive director of the Builders Association of the Twin Cities.  “Increasing prices of land and building materials increase total building costs which in turn creates a drag on single-family housing construction and is reflected in the survey as a pessimistic score. There is also an expectation that mortgage rates are going to increase moderately over the next year. This is also reflected pessimistically in the survey as it adds to the total cost of purchasing a home,” said Siegel.

Tousley noted that these first two surveys are providing a baseline to compare with future surveys. “As we accumulate more survey results over the next few years, the results will begin to reveal market trends that will be useful as a forecasting tool,” he said. “The industry leaders we poll are actively engaged in studying both the demand and supply side of the housing market,” said Tousley. “Since they are involved in creating new housing units and adjusting supply-to-demand conditions, these individuals are close to the actual changes taking place in the market.” These experts are asked to assign a number of zero to 100 for each of the six questions. A midpoint score of 50 is neutral; scores higher than 50 indicate a more favorable outlook and scores lower than 50 indicate a more pessimistic outlook. The survey also provides a composite score, or overall average, for the six questions.

Here are the scores for each of the six questions:

Housing Starts: 63 (up 3 from December)

This score indicates an increasingly optimistic expectation by the panel that the number of new single-family housing starts will increase in the coming year.

Square-foot sale price: 69 (same as December)

This reflects the panel’s strong belief that sale prices will be significantly higher a year from now. The net result is the expectation that when compared to previous years, 2016 will be a much better year for single-family home builders.

Land prices: 31 (up 1 from December)

This pessimistic score changed little from the first survey in December. The score reflects a belief that the rate of increase for land prices is going to be greater than the rate of increase for home prices in general.

Availability of finished lots: 56 (up 6 from December)

This indicates an increasing optimism that there will be more finished lots available over the next 12 months. That’s a good thing for the market since it helps moderate land prices and encourages more construction.

Cost of building materials: 36 (up 2 from December)

Like land prices, this score is just slightly less pessimistic and continues to reflect a concern that some of the gains from increased sale prices and more building starts could be offset by the higher costs of building materials.

 Mortgage rates: 32 (up 2 from December)

This reflects the panel’s expectation that mortgage rates are going to increase moderately over the next year. Most panelists are expecting an increase of .5% to 1%.

June 2016 Homebuilders Image

More Information

Additional details can be found on the Shenehon Center’s website: http://www.stthomas.edu/centers/shenehon/wp-content/uploads/sites/7/2014/07/Twin-Cities-Home-Builders-Survey-June-2016.pdf.

 

Commercial Real Estate, Commercial Real Estate Index, Development, Economics, Industrial Real Estate, Industry News, Investment Real Estate, Office Real Estate, Real Estate Trends, Retail Real Estate, Twin Cities Real Estate

Semiannual Survey of the Twin Cities Commercial Real Estate Experts Predicts Continued Favorable Market Conditions

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Leaders in the field of Minnesota commercial real estate expect to see a continuation of the favorable market conditions for commercial real estate that we have been experiencing for the past two to three years.

May 2016 Results

The semi-annual Minnesota Commercial Real Estate Survey conducted in May 2016 has produced some interesting results. Overall, the survey continues to indicate a slightly less than neutral expectation looking ahead two years to spring 2018 for commercial real estate. The composite index was recorded at 46. This is the sixth consecutive survey where the composite index has been in the 46 – 48 range. Index values greater than 50 represent a more optimistic view of the market over the next two years, with values of less than 50 indicating a more pessimistic view. Although the composite index level is similar to previous surveys the pattern of the individual indexes in the current survey is very different.

As was done with all ten of the previous surveys, the same group of 50 commercial real estate industry leaders involved in development, finance, and investment were polled regarding their expectations of near-term, future commercial real estate activity. One thing we have observed in the current survey is there is less variation in the responses and that has caused a more uniform response rate reflecting the panel’s increased certainty in their views. The individual indexes are detailed below:

Rent Expectations

Less optimistic outlook that rents will continue to increase at current rates. Market conditions expected in spring 2018 are best described by the price for space (rental rates) and the supply of space (occupancy levels). The index for rental rates has declined from a highly optimistic 66 to a somewhat less optimistic 60. This is an indication of an expectation of a moderation of rent growth over the next two years. Higher rents help to offset the increased costs of new construction. A slowdown in rent growth puts pressure on expected returns that will be achieved by developers and owners.

Occupancy Expectations

A continued neutral outlook on expected occupancy levels. The index for occupancy levels increased slightly from 50 to 52. Despite the increase, the panelists continue in their expectation that occupancy levels will remain steady at current levels. As new buildings have been completed it takes some time for the market to absorb the new space. Over the last 2 years the occupancy index has been drifting downward towards a neutral expectation concerning the demand for space.

Land Price Expectations

Increases in land prices are expected to moderate. The panel’s outlook for land prices reveals an expectation that land prices will increase at a slower rate between now and spring 2018. The land price index has increased (become less pessimistic) for the third consecutive survey moving from 37 last fall to 40 this fall this spring. The low point for the index was recorded at 31 in the fall 2013 survey. This sentiment while still in pessimistic territory indicates an expectation that land prices will moderate their rate of increase during the next two years. Increasing land prices increase total project costs and are a hindrance to new development, making it more difficult to obtain financing and adequate returns for investors.

Building Material Price Expectations

Increases in the price of building materials are also expected moderate.  The spring 2016 survey reveals that for the fourth consecutive survey our panel continues to become less pessimistic about the rate of increase in price of building materials. The building material index moved from a strongly negative 32 to a somewhat less negative 37, reflecting the panel’s opinion that building material price increases are expected to moderate. Since building materials are a major cost component of any development project any improvement in prices will be favorable for future development.

Return on Investment Expectations

Investors return expectations remain unchanged over the next two years. The index for investor’s return expectations has increased slightly for the third consecutive survey at 48. Although this index value is slightly pessimistic, it is essentially neutral.  The consensus among survey respondents continues to indicate that investors expected returns will not change significantly in the next two years. Investors will continue to seek out quality investments but they are being much more diligent about how they price risk and evaluate return when considering their investment options.

Lending Expectations

More equity is expected to be required.  The index for the amount of equity required by lenders decreased significantly, falling from 51 in to 42. This indicates the panel’s strong belief that credit will be available for good projects but lenders will increase their equity requirements in the coming two years. The good news is that more equity should result in better rates and terms; however, the bad news is that in many cases equity is harder to find and more expensive than debt.

 Summary

To summarize the panel is expecting to see a continuation of the favorable market conditions for commercial real estate that we have been experiencing for the last 2 to 3 years, however there will be some differences as to why this will happen. The panel has moved from a positive to a neutral position on occupancy. With all of the new product coming on line it is expected that given a little time the market will be able to absorb all of the new space but while this happens occupancy rates will be depressed in the short run. Additionally, the panel expects to see continued rent growth, however, that growth will be at a slower rate as new product comes on line and is absorbed. Development efforts will be helped by an expected moderation in the rate of increase in land prices and building materials. The panel is also expecting to see lenders tighten their lending standards somewhat. That results in lower loan amounts and higher equity requirements on development projects. Higher equity requirements makes development more difficult since equity dollars are more expensive and using less debt financing tends to reduce the rate of return on a project. Overall, our panelists see continuing activity at or near present levels in most categories of commercial real estate during the next two years.

May 2016 Commercial Survey

Affordable Housing, Development, Economics, Home Prices, Housing, Housing Trends, Industry News, Investment Real Estate, Minneapolis / St. Paul Housing, Real Estate Trends, Residential Real Estate, Residential Real Estate Index, Twin Cities Real Estate

September’s Housing Market Key Benchmarks Running Well Ahead of Last Year

A new emerging build-to-rent trend coming soon to the Minneapolis/ St. Paul Market Market Report

Strong housing-market benchmarks – including home prices and the number of sales – have continued well into the fall season across the 13-county Twin Cities region, according to a monthly analysis conducted by the Shenehon Center for Real Estate at the University of St. Thomas’ Opus College of Business. Each month the center tracks the median price for three types of sales: nondistressed or traditional; foreclosures; and short sales (when a home is sold for less than the outstanding mortgage balance). In addition, it looks for trends in the market and creates a monthly composite index score by tracking nine data elements for those three types of sales.

In September 2015 the $230,000 overall median sale price of a single-family home was unchanged from August but is 6 percent higher than in September 2014. Likewise, compared to last year the number of closed sales was up 12.5 percent and the number of pending sales (homes that are sold but have not yet closed) was up 11.9 percent. Herb Tousley, director of real estate programs at the university, cites two factors that are keeping the sale prices up: above-average wage growth and a historically low number of homes on the market (down 15.5 percent in September compared to a year ago). “We are continuing in a sellers’ market,” he said. “Look for these trends to persist through October before the market settles down a bit during the holiday season.”

Sept 2105 Median Sale Price

Build To Rent – A New Trend Heading in our Direction?

 A lack of existing housing inventory, a relatively low number of new housing starts combined with a tight rental market is causing some builders to change their strategy; they are starting to build homes specifically for rental. This is a new trend that is beginning to appear in a number of markets across the country. According to the Wall Street Journal, 5.85 percent of the 535,000 single-family homes started in 2013 were built to rent. That number is expected to continue to increase over the next several years. This trend is being driven by the lack of a once-plentiful supply of existing distressed homes that could be purchased a deep discount, renovated and then converted into rental properties. “For the last several months the percentage of distressed sales in in the Twin cities has been less than 9 percent,” Tousley said. “And that means there have been few distressed homes available.”

Builders are building three- and four-bedroom homes specifically to rent to families. They can select durable materials and interior finishes that can withstand increased wear and tear. And since these homes are new, expenses like repairs and maintenance will be much lower than comparable older, existing housing. “Some builders are selling these homes to institutional buyers as a way to sell homes in a hurry that allows them to keep their crews busy and cash coming in the door,” Tousley said. “In some cases, these homes are being sold in bulk to institutional buyers at an 8 percent to 10 percent discount. In tight rental markets like ours, investors believe that continued rent growth and rising home values will allow them to reach their investment objectives.”

He said the build-to-rent trend is beginning to appear in several forms. Some investors are buying newly built homes from builders on lots in new subdivisions and in long-standing, established neighborhoods that are located in the same general geographical area. These large investors already own and rent homes that are scattered in different locations and they have the infrastructure in place to manage and care for the properties. In some cases developers are building entire rental communities that have three- and four-bedroom homes built with higher quality materials that will offer amenities similar to high-end apartments such as a club house, fitness center and resort-style pool area. Landscaping and exterior maintenance will be reduced where crews can mow all of the yards, plow snow and maintain the common areas on a large-scale basis.

“These communities would be attractive to a number of potential tenants,” Tousley said. “These homes would appeal to families who are new to the area and would like to get to know the market before they buy. This gives renters a chance to live in a nice neighborhood while they look for a home to purchase. Other renters would like to live in a high-quality neighborhood but don’t have the down payment required to purchase a home at this time. Some developers are offering these homes as an opportunity for renters to save for a down payment and build their credit until they can qualify for a mortgage. A rent-to-own concept could help potential buyers purchase a home in today’s tougher lending standards.” “While we haven’t seen build-to-rent activity yet in the Twin Cities, I wouldn’t be surprised to see this trend emerge here in the near future,” Tousley said.

The St. Thomas indexes.

Here are the Shenehon Center’s monthly composite index scores for September 2015. The index, which tracks nine data elements for the three types of sales (traditional, short sales and foreclosures), started in January 2005. For that month, the center gave each of the three indexes a value of 1,000.

The September 2015 index score for traditional sales was 1,114, down from the record-high 1,126 in August. The downturn is blamed, in part, on declines in the number of new listings and closed sales.

The September 2015 index score for short sales was 955, down from 975 in August. There were only 97 short sales in the 13-county Twin Cities region in September, representing 1.9 percent of total sales.

The September 2015 index score for foreclosures was 822, up from 818 in August. There were 333 foreclosure sales in September, representing 6.4 percent of total sales.

Sept 2015 UST Indices

More information online: The Shenehon Center’s charts and report for September can be found at http://www.stthomas.edu/business/centers/shenehon/research/default.html.

The index is available free via email from Tousley at hwtousley1@stthomas.edu.