Gorman Farms Development, Medina, MN – 80 Homes Proposed

Swanson Homes is looking to develop the 80 acres known as Gorman Farms in Medina, MN.   This parcel sits just east of Foxberry Farms development and is best described as east of County Road 116, just south of Hackamore Road, north of Shawnee Woods Road, and west of Wild Meadows.

The development is not imminent, but rather the developer, Curt Swanson of Swanson Homes, has made the request of the Medina City Council to incorporate this parcel in to the 2030 Comprehensive Plan for MUSA.

Swanson’s plan call for 80 homes within the 80 acre parcel.  However, once the City of Medina nets out the wetlands and any other deductions, Swanson’s plan calls for essentially 2 units per acre.   The Met Council is pushing the City of Medina for 3-5 units per net developable acre.  It’s unclear how successful Swanson will be to get this kind of low density project approved.

The minutes from the council meeting where Swanson Homes presented their plan to the City of Medina can be found here.  (item # 9 on page 5 of this web page).

Curt Swanson plans to build homes similar to those found in Wild Meadows South i.e. averaging about $ 1 million per home.  (Considering that the Bridgewater development is similar, it looks like the going rate for a new luxury home in Medina and the Wayzata School district is one million dollars).

Swanson builds some nice homes.  If you’d like to see a sample of his product, stop by his Seven Greens Development next to Providence Academy.

City of Medina 2030 Comprehensive Plan Update

Last fall, the City of Medina embarked on an ambitious plan to hear from as many Medina residents as possible through a variety of venues including public forums at the City Council meetings, neighborhood meetings, and specific public meetings to address the various pieces of the 2030 comprehensive plan update for the city of Medina.

I had the opportunity to attend a few of these meetings.  It was clear to me that the city is very divided on the issue of development.  On the one side are the land owners.  Many of  them have held land for years – sometimes for generations.  They see that land is selling for $200,000 to $250,000 per acre and they would like to cash in.  Who can blame them?

There are those on the opposing side who do not want to see much for development.  Many of the people who hold this opinion are newer residents to Medina.  They purchased a beautiful, expensive home and bought in Medina for it’s rural character.

Given last November’s election, it’s hard to imagine that we will see runaway development in the City of Medina.  However, if we want to have more business services in the city, that’s going to require more roof tops.

During the past few months, the City of Medina has been taking requests from citizens regarding the City of Medina’s plan to update the 2030 Comprehensive Plan.  There are four pages of requests essentially for development.  Many of the requests are asking that the City of Medina include their parcel in the MUSA for 2030 so that they will have sewer and water.  This would increase their land value overnight by a very significant amount.

It will be interesting to watch how this plan comes together over the next several months as the new council begins its work and puts its mark on the City of Medina for the next 20 years.

County Road 116 in Medina – Update January 28, 2007

I communicated with Chad Adams, City Administrator for the City of Medina to check in on the status of the request for a speed study.  If you recall, we collected over 70 signatures for a petition which was given to the City of Medina and discuss as a City Council meeting in November 2006.

Chad informed me that he had received a copy of a letter from Hennepin County requesting MnDOT conduct the speed test as we’ve requested.   It’s Chad’s understanding that this request still needs to undergo a review.  He does not believe that’s happened yet.

Hopefully we’ll hear more on this issue from Hennepin County and MnDOT come spring.

U.S. Economy remains strong – IBD

Investor’s Business Daily lead story yesteday was on the continued strength of the U.S. economy.  While many have feared a housing led recession in ’07, the Bond market is signaling that we have pushed our way through the soft spot and are gaining stronger footing for growth.

Meanwhile, the Wall Street Journal is reporting that while durable goods were up 3.1% in December and housing starts improved by 4.8% for the month, 2006 ended down 17.3% for new housing starts.  That’s the worst performance since 1990.

For the full year, new-home sales fell 17.3% in 2006, the largest decline since 1990. Home builders sold roughly 1.1 million new homes last year. On Thursday, the National Association of Realtors said that sales of existing, or preowned, homes fell 8.4% to 6.48 million. Taken together, sales of new and existing homes totaled 7.54 million units last year, down 9.78% from about 8.36 million units in 2005.

The figures also do not take into account the high number of buyers canceling contracts on homes. In addition, say economists, the 1.5% drop in the median home price in December to $235,000 from a year ago may understate the actual size of the price decline because it does not factor in the generous incentives that builders are offering buyers to sell homes. Incentives can be indicative of further weakness in the market.

The builders do continue to offer incredible incentives including those who are building here in the Twin Cities.

 

Motley Fool on the home builders – are we at bottom?

The Fool does a nice job of recapping some of the recent earnings reports from the likes of Centex, Ryland, and Toll Brothers.

Home Price Estimator

The National Association of Home Builders has just developed and published an online home price estimator.  This is not a Zillow-like product.  Rather, it takes in to account various features of a home and in which part of the country it’s in to calculate the various values of certain features of a home.

To really use it requires access to Microsoft Excel.  Additional explanations about the newly release Home Price Estimator by NAHB can be found here and here.

New home inventory drops for 5th straight month

The supply of homes available for sale at the end of December totaled 537,000 units, down from 542,000 units in November. The month’s supply number dropped to 5.9 from 6.1 in November.This was the fifth straight month of declining total inventories, after they peaked at 573,000 homes for sale in July.  It was the lowest inventory reading in 10 months.According to the NAHB, new homes sales were up 4.8% in December.

Calculated Risk has a posted a nice chart showing new home sales by year from 2000 – 2006.There’s no doubt the builders are burning off inventory and the expense of their profits and those new home buyers who purchasd a home only one year ago.

 

Forecast for Twin Cities Real Estate Market 2007

The Minneapolis Area Association of Realtors has published their annual forecast for the upcoming year.   From their take, 2007 will be much like 2006 with the exception being things have leveled out and the deceleration in the market has run it’s course.  Only time will tell if this forecast is accurate.  The market is made up of thousands and thousands of buyers and sellers making decisions each and every day throughout the year.

2626 West Lake – Luxury Condos on Lake Calhoun, Minneapolis, MN

Representatives from the Lander Group came to our office today to announce another new luxury condominium development in Minneapolis.  I know…that’s just what this market needs is another condo development.   This one appears to be different.  The new development is called 2626 West Lake.

The Lander Group appears to have a good track record of building exceptional projects.  This one is located next to the Calhoun Beach Club.  The development will consist of four smart and modern looking buildings.  Every unit will have a few of the lake – either Calhoun or Lake of the Isles.  I like the idea of having four distinct units rather than one very large building.

Pricing starts around $625,000 for approximately 1500-1600 square foot unit.  The premium units will sell for between $3 million and $6 million.

National Home Builders – throwing in the towel on land

If you’ve been following the earnings reports from the national home builders, you’ve been reading about how all of them are now writing off much of the land that had options for and they are reducing the book value of what ever land they continue to hold.  If you read the news reports, listen to the mainstream media, and read what the “housing crash” bloggers have to say, the world is coming to an end for the U.S. housing market.

But what they don’t realize is what’s really happening here.  Let’s say a builder has purchased an option to buy some land.  The deal has a purchase price of $250,000 per acre for a total purchase price of $10 million and the option to hold that land was $500,000.  So now, the builder walks away from his half million dollars only to try to go back to the land owner and renegotiate the land for $6 million or 40% less than what the initial deal was.  Despite the $500,000 the builder or developer walked away from, he still stands to improve his position by $2-3 million by going back to the table to renegotiate.

There is no bell that gets rung when the market hits the bottom, but this sure has the makings when every major builder is throwing in the towel on their land holdings and writing off everything they can.

It’s called clearing the decks…and making way for significant performance improvement in the future.