Star Tribune Sold! McClatchy’s loss $500 million – ouch!

It came as a surprise yesterday when news broke that the Star Tribune was sold by McClatchy to a private investor group called Avista Capital Partners for $530 million.  McClatchy will also receive a tax benefit of another $160 million approximately.  The company had purchased the Star Tribune with much fanfare in 1998 for $1.2 billion.  That’s a $500 million reduction in the value of the property in 9 years.
Classified advertising and subscriptions have been a real driver of revenue for newspapers, but with the advent of the internet, classified advertising in print is doomed.  Add to that the Star Tribune’s unrelenting liberal/leftist agenda in its news and editorial divisions have driven away large numbers of readers.

From a real estate perspective, most Realtors today only run print ads to satisfy their sellers.  They are a total waste of time and money otherwise.  It’s only a matter of time before the big real estate brokers pull all of their advertising from the Star Tribune.  The auto dealers will be next.  There’s a good chance you’ll see this occur during 2007.  Perhaps Avista can turn this around?  I would imagine one of their first phone calls will be to the CEOs of Edina Realty and Coldwell Banker Burnet.

The Minneapolis-St. Paul Business Journal is running a poll as to gauge the public’s opinion on the Star Tribune purchase.  It looks like the more people believe the editorial product will be improved with the new owners.

Foxberry Farms neighborhood, Medina, MN – winter scenes

The Foxberry Farms neighborhood in Medina, MN consists of approximately 130 homes built by Lundgren Brothers before they were bought out by Lennar.  When you combine the neighboring Regency Estates, there are nearly 150 homes in the development.  Most of the homes were built between 1996-2000.  The neighborhood is a wonderful place for families and there are over 300 children who live in the neighborhood.  It is located approximately 5 miles west of 494 on Highway 55.  Travel north on County Road 116 for less than a mile from Highway 55 and you’ll arrive at Foxberry Farms.  The neighborhood is about a half mile west of the Wild Meadows development in Medina, MN.  (You should also know that I live in Foxberry Farms).

Here are some pictures the Foxberry Farms neighborhood in Medina, MN. These photos were taken just before Christmas. Foxberry Farms is a beautiful neighborhood during all the season’s of the year, but it is particularly beautiful during the winter.

Click on pictures to view larger images:

Foxberry Farms middle entrance:


Foxberry Farms Middle Entrance

East side of the Foxberry Farms neighborhood looking north along County Road 116: 

Foxberry Farms East Side Co Rd 116 looking north

Foxberry Farms fence along Foxberry Farms Drive:
Foxberry Farms Fencing

Foxberry Farms southern entrance:

Foxberry Farms Southern Entrance

Foxberry Farms trail that runs along east side of the neighborhood: 

Foxberry Farms Trail

The view from the back of my home – I think it’s one of the best views in the entire development, but I’m just a little biased on this:

Foxberry Farms View from back of home

New Homes Sales Rise 3.4% – National Housing Inventory of Homes Fall for Fourth Consecutive Month

The Commerce Department reported today that new home sales jumped an unexpected 3.4% in November versus October.  Experts expected a 1.1% rise  in new home sales.

The median price of a home sold in November rose 3.2% over October and remained 5.8% higher than the year previous.

The Commerce Department also reported that housing inventory has dropped for the fourth consecutive month.

On Wall Street, the home builders continued their rally on the news.

Twin Cities Housing Supply Outlook December 18, 2006

Each week, the Minneapolis Area Association of Realtors(r) publishes a report that breaks down the housing supply for the Twin Cities. At this point, we have a seven month supply of homes for sale. The way this figure is calculated is they take in to account how many homes are currently pending – i.e. under contract – versus how many are for sale. That ratio is seven months.

Click on graphic for larger image:

Twin Cities Housing Supply Outlook December 18, 2006 Link to Larger Picture

For $1 million plus homes, the supply continues to be a problem. There’s a 16 month supply of previously owned $1 million plus homes and a 27 month supply of newly constructed $1 million plus homes.

Click on graphic for larger image:

Twin Cities Housing Supply Outlook December 18, 2006 $1million+

Beautiful Winter Morning – Medina, MN

The first snow of the season finally arrived in the Twin Cities. The snow was wet and sticky and was still clinging to many of the trees in the area three days later. Medina is absolutely beautiful at all times of the year, but it is particularly beautiful in the winter.

Country lane in Medina, MN:

Medina MN Country Lane on Cloudy Wintry Day

Looking East as the sun rises:
Medina Minnesota Looking East on Wintry Morning

This is one of the more beautiful barns in the entire Northwest Hennepin county area. It sits on the Medina Golf and Country Club’s 2nd hole.
Medina Minnesota Red Barn in Winter

Housing slowdown and the economic foodchain – How Home Depot is coping

Forbes has published an interview with Bob Nardelli, CEO of Home Depot. (To see how Home Depot tracks with some of the national home builders see this chart comparing Home Depot (HD) with Lennar (LN).

In the interview, Nardelli talks about how they were originally planning for a 5-7% decline in housing and not the 20-40% decline (in sales volume – not price appreciaton) that most parts of the country have seen.

He mentions that they national builders pulled back faster than ever before. This has been a point of conversation I’ve had with others. The national home builders, at least operationally, are trying to model the likes of Wal-Mart and Intel with Just in time inventory and manufacturing. That’s in part way the pull back and slow down has been so rapid. The deceleration on the part of the home builders has been remarkable.

Merry Christmas from the Murphy’s!

Merry Christmas from the Murphy’s!

University of Michigan’s Consumer Sentiment – Home Buyers Looking for Deals

The University of Michigan publishes a consumer sentiment report each month that is closely watched by Wall Street.  In fact, the Wall Street Journal published a column today talking about the noteworthy improvement in consumer sentiment toward purchase homes.  Last month’s reading was 136 up from a low of 116 in September of 2006.  136 is the best reading since August 2005.

What’s interesting to note about the release of the November data is the comment about consumers looking for deals:

“‘Price discounts have dominated consumers’ purchase plans to a greater extent than ever before. ‘More consumers made their purchase plans for vehicles, furniture, appliances, home electronics, and other household durables contingent on the availability of price discounts than ever before in the more than 50 year history of the surveys,’ Curtin said. Nearly half of all consumers specifically cited price discounts when asked to explain the views on buying conditions.”

And here’s what was said about home purchases: 

“Home price declines have also become the most common factor cited by consumers in their evaluations of home buying conditions. The proportion of consumers that reported declines in home prices has doubled in the last three months, with nearly half of all consumers citing home price declines; in just three other surveys during the past fifty years have more consumers mentioned home price declines.”

Perhaps home prices are getting low enough for consumers to start snapping up the deals?  We are a consumer nation and it appears the retail mentality of shoppers may be coming to the real estate market.

I try to tell sellers, buyers are looking for deals.  If your home is not a deal in today’s marketplace, don’t expect it to sell.

Light Rail Transit Coming to Eden Prairie – 2015; Cost $1.4 Billion

Government officials have been studying the various transportation needs in the Twin Cities. They have decided we need light rail transit to solve our congestion problems and make the Twin Cities a modern, twenty first century metropolitan area.

This week, the Hennepin County Regional Rail Authority announced their recommendations for LRT to serve the needs of the southwest corridor, including cities like Eden Prairie, Chanhassen, and Minnetonka. The options likely to be approved range in price from $1.2 billion to $1.4 billion. If it’s anything like the Hiawatha line, this project will likely cost closer to $2 billion. (Remember, we, the taxpayers, are stuck with a major subsidy of the Haiwatha line. Brett Shroyer wrote an excellent post some time ago about this). If the Southwestern Corridor is approved by the Metropolitan Council, the train will be operational by 2015. For a summary of light rail transit and specifically the Hiawatha line, the Minnesota Legislative Reference Library just posted this.

The HCRRA estimates 23,000 – 28,000 daily riders. There’s no mention in the Lakeshore Weekly News story as to how many of these riders will be net new riders. Typically what happens is people just stop using the buses and jump on the train. If I find the net number of new riders I will post that.

“If the Central Corridor (St. Paul and Minneapolis LRT) and Southwest Corridor LRT lines were built to the downtown Minneapolis station, it would be possible for people to travel by train from Eden Prairie to the state Capitol, or from Anoka to Eden Prairie,” (Jason McGrew-King, Lakeshore Weekly News).

Yes, and we can go live on the moon…but what’s the cost to all of this? No one seems to talk about that, nor do they care. What’s 28,000 daily riders? It sounds like a pretty large number, but is it really? Is there any mention as to how many car trips are taken along this corridor everyday?

What could we get for our $2 billion if we built some roads in Minnesota?

The Minnesota voters just passed the Transportation Amendment in this last election. If you noticed, it was for roads and transit. Those interested in transit are not interested in relieving traffic on the roads. They are interested in massive public spending on projects that will never pay for themselves. To see what the lobbyists were saying prior to the election, you can see their site here. Here’s what the Minnesota Department of Transportation had to say…and here’s a counter to these arguments by Red State.

In any event, the Twin Cities metro area is projected to grow by one million people by 2030. We will have a “world class” transportation system and the worse traffic of any like-sized metro in the country.

Hennepin County Property Taxes Increase 5.5% for 2007

Hennepin County has approved a 5.5% increase in taxes for 2007.

Let’s see…  Inflation was up 2.5 – 3.0% this year and true property values based upon sales in 2006 is likely to show at best 1-2% growth and more likely will show a 1-3% decline in value.  The property tax payer takes a hit again.