Development in north Minneapolis marks new test of real estate in city’s most challenged niche

Star Tribune –

Many hope hot housing market will turn the area around. Bob Lux is confident buyers will pay $299,000 for a new, four-bedroom house with a creek view, granite counters and an open floor plan in the Lind-Bohanon neighborhood in north Minneapolis, the area of the city most starved for new homes.

That’s at least half what the same house would cost in southwest Minneapolis, the area of the city where new homes are rebuilt fastest.

The house is one of several under construction at the Parkside at Humboldt Greenway, which has the potential to become a game-changing development for the part of the city that was hit hardest by the 2008 housing crash.

With the supply of entry-level houses at an all-time low in the Twin Cities and prices nearing record highs, Lux and others believe that the hundreds of vacant building sites that dot north Minneapolis are now ripe for redevelopment. “This could only happen at a particular time and we think that moment is now,” Lux said.

He is partnering with the Greater Metropolitan Housing Corp. (GMHC) to build more than 60 single-family homes and townhouses in the city’s northwest corner.

The project is the reprisal of the Humboldt Greenway, which was conceived in 2001 as a development with more than 300 units, including owner-occupied houses and rental apartments. Initially, that project was a success. The first wave of houses were priced at $239,900 — a bargain at the time — and many buyers finished their basements and paid for other upgrades. But construction halted in 2008 when the broader downturn hit, and the developer gave up control of the lots after completing 58 single-family houses and 36 townhomes.

As the foreclosure crisis raged on, the North Side became pocked with vacant lots after the city tore down houses that were abandoned or lost through foreclosure or tax forfeiture. Many of those lots have been on the market for years at giveaway prices, but finding buyers has been difficult because getting a mortgage to cover the cost of a new house has been a challenge. That’s quickly changing.

The city and county have ramped up their efforts to find buyers and subsidized dozens of new houses, creating comparable sales data to help justify higher house prices. And last year, the North Side’s Webber-Camden neighborhood was the most active ZIP code in the metro area for house flips, according to a Star Tribune analysis of sales data from RealtyTrac.

GMHC also scored a victory last year when it built a house and sold it for the full asking price of $350,000 — without any public subsidy — after just a few days on the market. And recently, Timbercraft Enterprises, a private builder/developer in New Brighton, acquired a few of those lots and listed a three-bedroom, two-bathroom house in Lind-Bohanon for $199,900. In all, there were 19 houses for sale in Lind-Bohanon last week and six had buyers within days of hitting the market.

With a base price ranging from $280,000 to $300,000, the houses at Parkside will be a new test for that momentum on the North Side. Crews have just put the finishing touches on the first house, which was featured on the Builders Association of the Twin Cities Parade of Homes Spring Preview. Five more are under construction.

“It’s the perfect time for this project,” said Jean Bain, a sales agent with Coldwell Banker Burnet, North Side resident and a consultant to the Northside Home Fund, a nonprofit that’s focused on rebuilding the housing market. “We’re running people out to properties as soon as they hit the market.”

During recent weekend open houses, 50 to 75 people a day toured the completed house at Parkside.

“This is the only area in the city where you can buy a new house and the entire neighborhood is being built at the same time,” said Nicole Reed, a sales agent for the Jason Stockwell Team at ReMax Results, which is marketing the development.

MyHomeSource, a subsidiary of Lux’s Alatus LLC, will likely begin to accept purchase offers for Parkside later this month after finalizing rules for a homeowners’ association.

Two weeks ago, Eric Chad, who is now renting in the Cedar-Isles-Deans neighborhood of Minneapolis, toured the house after seeing the floor plans online. “I’ve always been drawn to the idea of building, and Parkside seemed to offer a chance to build a relatively affordable home while still staying in the city,” he said. “I like what I have seen and am very interested, but I just have to evaluate personal factors to decide if the move would make sense for me right now.”

He liked it so much he came back again with his mom a week later.

“I don’t think that one is likely to find homes of comparable size, with comparable finishes, at such affordable prices without going into the suburbs, and probably second- or third-ring suburbs,” he said. “In that respect, I think the houses compare very well.”

Blake Zochert, a North Side resident who has painstakingly rehabbed several once-grand houses in the area, said that he’s hopeful the project will help boost home values throughout the area. He said market forces and subsidized development have kept a lid on the value of the kinds of rehabs he’s done.

“It could prove new construction, along with smart development, can work in North,” he said. “I’m happy to see a developer asking fair, market-rate prices for their product.”

By: Jim Buchta
Date: Mar 21, 2016 09:12 am CST
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