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Minneapolis Downtown

(612) 347-8000

questions.downtownminneapolis@edinarealty.com

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Market Information > Downtown Journal Article

Downtown's Population Sees Steady Growth


Downtown’s population continues to climb a little each year, and now we have about 34,140 residents, according to Maxfield Research.

That’s nearly 30 percent higher than the number of Downtown residents in 2000, and it’s larger than recent downtown population estimates in Denver and San Diego.



Andy Tate, a resident of the North Loop since March 2005, said there is a stark contrast between the Warehouse District he moved into and the neighborhood he lives in now.

“When we moved in, we had one coffee shop we could go to in the neighborhood, and just a handful of restaurants. We’d find that most nights it was more or less a ghost town,” he said. “It’s a neighborhood now that’s self-sustaining. We have a place where we can go get groceries over at the 5th Avenue Market; we can go out for breakfast, lunch or dinner; there are places to go from an entertainment standpoint [and] workout facilities. Before, we had to leave the neighborhood to live our lives, but now we can actually stay in the neighborhood all weekend and have plenty to do.”

Downtowners have long braced for a slide in the real estate market. Developers abandoned at least seven condo projects in the past year, many of them citing difficulties in obtaining financing. But thanks to the drop-off of projects in the pipeline, some analysts say we are finally nearing an equilibrium where buildings are filling up and demand could start catching up with the inventory of unsold condo units.

Real estate analysts say Downtown’s homeowners have been a bit sheltered from the slackening economy over the last couple of years.

For one thing, median home prices here are not dropping — median prices have been growing since 2006, albeit by a shrinking percentage each year.

In addition, the percentage of foreclosures here is much lower than the rest of Minneapolis. The city’s current inventory of condominiums contains half the number of foreclosures that single-family homes have in Minneapolis.

“I think a lot of people expected Downtown to take a bigger nosedive,” said Mary Bujold, president of Maxfield Research. She said Downtown is continuing to see a push from empty nesters and young people.

To account for solid home prices, LarsonAllen Manager Tom Melchior said most sales now are in more expensive buildings that were built in the last five years. In the past six months, for example, at least three units at the Carlyle sold for more than $1.7 million.

Melchior said another explanation for stable home prices is that developers are refusing to discount the sale price. Instead, they are offering thousands of dollars in unit upgrades, or free association fees for three years — at $300 a month, that’s a savings of $10,000.

“They really don’t want to start cutting prices because that’s sort of the ultimate [signal that] we’ve got a problem,” Melchior said.

Downtown’s share of the recent economic turbulence remains to be seen, but homeowners have probably already felt the pinch at closing time.

“There is no question that it’s harder to finance a unit ... now than it was six months or a year ago,” Melchior said. “That’s going to keep things a little bit tough for a while. On the other hand, there has been a slow but steady absorption of inventory Downtown. … When the financing restrictions loosen a little bit, then I think you’ll see a big increase in the demand again.”

It has always been tougher to get a condo loan than a loan for a single-family home, Bujold said. She said some mortgage companies do not even provide loans for condominiums.

“It is more difficult to get a home equity loan on a condo; it’s more difficult to get a mortgage on a condo,” she said. ”Generally, I think mortgage lenders view them as more risky.”

Bujold thinks tighter lending for condos has actually helped Downtown avoid some of the foreclosures seen elsewhere in
Minneapolis.

Of all the buildings for sale Downtown in the first half of the year, 5.8 percent of them were foreclosed or short sold. Meanwhile, the Minneapolis market had 27.8 percent of its available housing stock in some form of lender-mediated sale. A count of Downtown foreclosures yielded roughly 75 of them in the past year. Twenty-four buildings had four foreclosures or less, RiverWest Condominiums tallied five, and The Sexton tallied eight. Grant Park totaled 11 foreclosures in the past year, eight of them by the same couple.

The city of Minneapolis projects that Downtown will continue to grow, reaching more than 40,000 residents by 2030.

Alex Stenback, a Twin Cities mortgage banker and real estate blogger, said he expects entry-level buyers to lead Downtown out of the slowdown in the real estate market.

“From last year to this year, the actual raw number of transactions is up a little bit, but prices are still down,” he said. “That’s just the market working off this imbalance. [There is] too much supply and not enough legitimate demand, and I think maybe Downtown is a little closer to the bottom than other areas.”





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