"We Bailed OURSELVES Out??"

"We" Minus the "Us"; or,
More Pronoun Confusion

The bailout and stimulus that we have administered to ourselves have left us without much cushion. There may be room, and even necessity, for a little more stimulus. But we have to get this moment right."

--Thomas Friedman, "Got to Get This Right"; The New York Times (11/27/2010)

I suppose if you're in London or Berlin or Beijing or wherever Thomas Friedman writes most of his dispatches, it looks like the United States bailed itself out.

However, here in Friedman's hometown of Minneapolis (actually, next-door St. Louis Park), the "we" he refers to looks decidedly more like a "them."

"Them," of course, being the same Wall Street actors whose reckless bets and insane leverage caused the mess in the first place.

It's hard to see how "we can get this moment right" if "we" can't even get our pronouns right.

Best Twin Cities Salad Bar(gain)

$3.99/lb at Knollwood Cub

Regular readers of this blog know that I'm a (self-proclaimed) salad bar aficionado, and that I'm not shy about dishing out both compliments and criticisms, especially on price ("New Lindens Hills Co-Op").

Very much in the former category is the salad bar at the Knollwood (St. Louis Park) Cub: well-stocked, fresh, and cheap -- only $3.99 a pound.

IMHO, it's the best salad bar value in town.

Runners-up?

The salad bar at the new Rainbow just southeast of 394 and Turners Crossroad, in Golden Valley (by the West End complex and Costco); and Whole Foods' salad bar, just northwest of Lake Calhoun.

I hardly need to tell this to fellow "salad bar-ites," but the secret is to go a little before lunch hour (breakfast for me), when everything's freshest; and to select expensive, prepared foods rather than cheap carb's and starches.

P.S.: lest my knock on the Linden Hills Co-Op salad bar be misconstrued, I think it's got superb food; it's just the price ($8.99/lb) I was balking at.

Watch this Space: 4121 W. 28th St.

New-and-Improved in Fern Hill

The Seller (my client) moved out in July.

Guess who moved in?

Not the Buyers -- their contractors.

Six months from now, this 1937 Colonial will have undergone a top-to-bottom renovation costing well into six figures.

Take a project like this, multiply by 10 (conservatively) over the last 2-3 years, and you have the ingredients for a very healthy neighborhood.

Which Fern Hill certainly is.

On Sale: Basswood Road

Chain-Reaction "For Sale" Signs

It's one of those anomalies that you see from time to time -- and that understandably gives Buyers pause: a block where every other house seems to be for sale.

At the moment, that phenomenon seems to characterize Basswood Road, a 3 block-long street just west of Cedar Lake that straddles France Ave. (all but the very east end is in St. Louis Park; the rest is in Minneapolis).

What's going on?

I see three factors at play:

One. The "clogged pipeline" effect.

Two of the four (soon to be 5!) houses on the market were originally listed more than 18 months ago.

Rather than reduce their prices incrementally when they failed to sell, the owners have been holding their ground, literally.

While that strategy can work in a rising market, in a falling or flat market it causes a home to be "marooned," overpriced and stagnant -- and gumming up the pipeline for more recent home sellers.

Two. Functional obsolescence.

Much of the housing stock in the area consists of ramblers built in the 1950's: sturdy and solid, to be sure, but now functionally obsolete in many cases.

That often means only one hall bath for all the Bedrooms (vs. a private Master Bath); a dated, too-small Kitchen; and small and too few Bedrooms.

As I've written before, while mortgages have never been cheaper, (major) remodeling dollars are especially scarce now.

Three. Generational turnover.

Several of the Sellers have been in the neighborhood for 25-plus years.

They're now empty nesters who need less space, don't want to do maintenance, and want to travel more.

In other words, it's just time for them to sell.

Having all bought around the same time, it's natural for them to now move on at the same time.

Sizing it All Up

So, what should Buyers make of all the homes for sale on Basswood now?

And should you ever steer clear when you see too many "For Sale" signs?

My answers: "not so much," and "yes, depending."

Certainly where the explanation is rampant foreclosures, Buyers are wise to stay away: foreclosures are like an undertow that pull down the value of all nearby homes.

Ditto for unalloyed negatives like new (or wider) nearby freeways, garbage incinerators, power stations and the like.

However, when other factors are at play (the case on Basswood), and the neighborhood is in a great location with good housing stock, such temporary "Seller gluts" can be great opportunities.

What's Selling . . . Fern Hill

From Dowager to Belle of the Ball

Where: 2820 Huntington Ave. South, in St. Louis Park's Fern Hill neighborhood
What: top-to-bottom renovation of what had formerly been a 1 1/2 story home with less than 2,000 FSF
When: listed August 6; closed Sept. 20.
How (much): asking price = $859,900; sold price = $840k (purchased last Winter for $390,000).
Who: listed by Mike Sward, Edina Realty City Lakes

Talk about leap frog: what had been the dowager of this pretty block in Fern Hill is now the belle of the ball.

You name it, they did it: dramatically opened up space (see, "What do you do with dead space?"); four all new baths; a spectacular new Kitchen; a widened, 2 car garage in place of the original one car; 3 new dormers; a brand, new lower level with 1,700(!) finished square feet (and over 4,500 total in the re-done home); and a new mud room.

And on and on.

The result?

A quick sale (after about a month of market time) for virtually full price, followed by an even quicker closer (one week).

What do you do with dead space?

(Knowing When to) Open it Up

What do you with a space, like the one pictured above, that feels claustrophobic and cut off from the rest of the home?

Open it up.

So, what was once a seldom-used Den -- technically, a legal Bedroom -- is now annexed to the sweeping, new Living Room.

In place of the confining walls are handsome columns that double as structural support.

The makeover was part of a top-to-bottom, 5 month transformation at 2820 Huntington, in St. Louis Park's Fern Hill neighborhood (see, "What's Selling . . . Fern Hill").

The Bridge to Somewhere

Highway 7/Wooddale Avenue Interchange

To frustrated motorists, it's an all-too familiar scene: miles of closed-off roadway that persists for months (or years), traffic slowed to a crawl (or stop), etc. -- all for the benefit of a handful of construction workers, progressing at a glacial pace.

I can think of multiple highway projects around the Twin Cities that seem to meet the foregoing description -- but the new bridge going up over the Highway 7/Wooddale Interchange isn't one of them.

The construction site is swarming with workers most hours of the day (weekends, too?), and the bridge appears to be going up in record time.

When it's done, Highway 7 will be an unimpeded four lanes wide, and local traffic will be able to go from West Lake St. to 36th street with no more long traffic lights.

"The Flip is Dead . . . "

Where: 4906 Old Cedar Lake Road just south of 100 & 394 in St. Louis Park

What: 3 BR/1 Bath rambler built in 1924 in very rough condition

How much: asking price $89,900; sold price $78,500

When: listed 3/26/2010; off-market 4/21/2010

Fern Hill Extreme Makeover

Playing Housing "Leapfrog" on Huntington

Where: 28xx Huntington Ave. South, in St. Louis Park's Fern Hill neighborhood

What: whole house renovation

Who: Mike Sward, agent; Edina Realty, broker

When: due back on market late Summer

How much: projected selling price = low $800's

No, you won't recognize this home driving by -- it won't look like this for a few more months, when the new dormers are added.

For now, it's a hive of dumpsters and contractors, who are busy remaking this 1949 Fern Hill Cape Cod.

When it's complete, the home will go from the runt of the block (1,949 FSF; sold price $390k this March) to the "Charles Atlas," complete with all the bells & whistles.

Petsmart Sale? Not Exactly

Full Parking Lot

The St. Louis Park Costco (just southwest of 394 and 100) and nearby stores (Home Depot, Rainbow, Office Max, etc.) seem to be a fixture in my life.

So, I noticed that the parking lot in front of the nearby PetSmart was unusually full all week.

The explanation?

The new Panera next to it is now open -- and judging from the parking lot, appears to be a hit!

Great Home, Great (New) Price

Handsome Fern Hill Colonial

When: $30k price reduction yesterday!

Where: 4121 W. 28th St (28th & Inglewood Ave. So.), in St. Louis Park's Fern Hill neighborhood
What: 4 Bedrooms (all up), 3 Bath 1937 Colonial with 3,000 square feet
How much: now $549,900
Who: listed by Ross Kaplan, Edina Realty City Lakes

This Fern Hill Colonial has a lot going for it: one of the most beautiful Family Rooms I've been in -- at any price point; four Bedrooms up; formal Living and Dining Rooms; and a ton of charm and character throughout.

Oh, yes: and an attached, 3-car garage with tons of extra storage space.

Don't miss the Gazebo in back.

Please call directly (612-925-7701) to set up a private showing.

St. Louis Park & Light Rail

Bullish on the Light Rail Corridor

Just because I don't make market calls ("How Clear Are Realtors' Crystal Balls?") doesn't mean that I don't give clients input -- and lots of it -- regarding neighborhood trends, prospective development, and the like.

A good example of that is St. Louis Park and the light rail corridor.

Though the route is not yet finalized at the north and south ends of the line, the three stations proposed for St. Louis Park -- Beltline, Wooddale, and Louisiana (pictured above) -- are not expected to change.

In fact, anyone who's driven Highway 7 lately will notice that the site of the future Wooddale station is already being prepared.

Everything else being equal, one would expect that housing near these stations will benefit as the light rail line comes closer to becoming a reality.

P.S.: one of economists' favorite terms is "ceteris paribus" -- Latin for "everything else being equal." As in, the variables baked into economists' models are valid, ceteris paribus -- which of course it never is.

Real Estate "Insider Trading"**

Best Time to Sell? When No One Else is

Where: 27xx Raleigh Ave. South, in Fern Hill's St. Louis Park neighborhood

What: Mint 1947 rambler with 3 BR/2BA and 1,800 square feet

How (much): $445,500 list price

When: on market Monday (12/7)

Who: listing agent - Josh Kaplan; broker - Edina Realty

If everyone's taking their home off the market for the slow holiday season, what should a savvy Realtor who wants to sell their own home do?

Put their home on the market.

That's exactly what's going on at 27xx Raleigh, in Fern Hill's St. Louis Park neighborhood. The home hit the market on Monday.

The owner-agent, who works in my office, requested that I mention that the home is in "fabulous" condition, and a great value.

There you go, Joseph!

**No, a Realtor selling their own home isn't really "insider trading."

Rather, I'm referring to the phenomenon of doing what the supposed "insiders" are doing.

In the stock market, that means buying when the pro's -- corporate insiders -- are buying, and selling when they're selling.

It's no different in real estate.

The strategy recalls one of my favorite Warren Buffett lines, i.e., you should be cautious when everyone's bold, and bold when everyone's cautious (my paraphrase).

Don't Go By Asking Prices

Sold! (For 1/3 of Tax Assessed Value)

What: 3BR/3BA walkout rambler with almost 2,600 FSF

Where: 2625 Quentin Ave. South, in St. Louis Park's Fern Hill neighborhood

How much: originally listed for $226,800 on Aug. 5.

When: closed Nov. 18 (Thursday); just posted on MLS this morning.

"Exhibit A" under the category, "don't go by asking price" would be this Fern Hill rambler.

Originally listed for $226,800 back in August, this foreclosure had a tax assessed value of $387,500. That consisted of $158,700 for the land, and $228,800 for the building.

The bank-owner took two, 5% price cuts, then finally got a deal in late October.

It closed Thursday.

So . . . . drum roll . . . . what did the Buyer pay?

Try $130,000.

No, that's not a typo.

Why So Low?

The short explanation is "supply and demand."

The longer explanation is that the house is a tear-down, due to the worst mold damage I've personally ever seen (I showed the house multiple times).

So, you toss out the building value, and focus exclusively on the land.

As I've blogged previously about valuing tear-downs, the analysis -- based on back testing dozens of Twin Cities deals the last 6-8 years -- is to determine the top of the block, add 20% for well-done, new construction, then divide by 3.5.

In this case, the corresponding formula is $400k x 120% = $480k; $480k divided by 3.5 = $137k.

Bingo! (Take off a little extra because of tight credit for new construction, and a soft market for more expensive homes.)

P.S.: and yes, you need to know the "comp's" -- which I do -- to know that the top of the block is $400k.

The West End in St. Louis Park

Retail Roll Out Continues

As the West End in St. Louis Park nears completion, the grand openings of various tenants are proceeding on a staggered schedule.

The development, formally called "The Shops at West End," is being marketed as a "lifestyle center" -- think, one-stop shopping -- and is located just southwest of 394 and 100 in St. Louis Park.

First to open: a new Rainbow grocery store, which opened last month, followed by Cooper, an Irish bar, that just opened.

Coming soon: Crave, an upscale restaurant, and a 14 theatre cineplex.

"Super Target" Killer?

While the planned hotel and office buildings are nowhere in sight -- casualties of the recession for now -- the street-level retail appears to be in place and attracting good business.

In particular, I'm already a fan of the Rainbow: easily the nicest in the Twin Cities, as far as I can tell (and much bigger than you'd expect looking at it from the street).

I can't speak to whether the development or the concept are going to be long run winners, but as a consumer and area resident, I'm happy for the added choices. The complex is also infinitely better than what existed on the site before: a hodgepodge "dead zone" of dated industrial buildings, a mothballed health club, and parking lots.

The fact that the project has a deep pocket co-developer, Duke, and powered ahead through what could only be called a "challenging" last 2 years for commercial development are other good omens.

History Lesson

P.S.: long-time area residents -- I qualify -- will recall that once upon a time (like 1960) the parcel was slated to be the site of Candlestick Park. Of course, the Giants left New York for San Francisco, and Candlestick Park was instead built on a windswept outcropping south of that city.

A few years later, the Twin Cities got the Washington Senators, and Metropolitan Stadium was built in an obscure suburb named "Bloomington" (now home to Mall of America; next time you go, look for the bronzed home plate in the exact location it occupied while the stadium was standing).

Coen Bros' "A Serious Man"

The Hebrew School Connection

[Editor's Note: 'A Serious Man' isn't a mystery, so revealing the ending isn't exactly ruining it. However, if you plan to see it and would rather be surprised . . . stop reading here. Regular blog readers may recall that I ran a post, "Economic Stimulus --Local Version" commenting on the mini-city that sprung up on Highway 7 while the movie was filming in St. Louis Park last Fall.]

It's hard not to like a movie that ends with a tornado bearing down on the Hebrew School where you spent thousands of stultifyingly bored hours growing up.

But I didn't.

Too dark. Too dry. And with none of the sweetness or inspired comic schtick in previous Coen brothers' movies like Raisin' Arizona (my personal favorite), The Big Lebowski, or The Hudsucker Proxy.

Is that really '60's St. Louis Park?

Still, if you're Jewish, over 40, and have a St. Louis Park connection . . . you may want to see it just for the local flavor.

The bar mitzvah scene was filmed at St. Louis Park's B'nai Emet synagogue, and many of the extras and smaller, supporting roles are members of the local community. For example, the retired cantor (prayer leader) at Beth El Synagogue played the cantor in the movie.

Other trivia tidbits: a reference to Fern Hill Road (no such thing -- it's actually a St. Louis Park neighborhood); Ruth Brin (an esteemed elder in the real-life Jewish community who just passed away); long-defunct Red Owl grocery stores; and Ron Meshbesher, locally prominent criminal defense lawyer.

Sticklers for accuracy (of a sort), the law firm's real-life address shows up on an invoice in the fictional movie.

Left Out

In the bigger scheme, though, the surprise was how little the Midwestern suburb depicted in the movie resembled the St. Louis Park I knew and grew up in, only 5 years later than the Coens.

Physically, the "movie" neighborhood was very flat, broad, and almost windswept --like what you'd imagine a small town in '50's Nebraska might feel like.

By contrast, the real-life St. Louis Park is leafy and cozy, and on the doorstep of countless lakes, parks, and other recreation.

And while '60's St. Louis Park could definitely breed cynical detachment -- after all, the Coen brothers were a product of that environment -- it also produced Thomas L. Friedman and Al Franken.

Hebrew School

Oh, yeah: the Hebrew School connection.

My pet theory is that "torture-by-boredom," as practiced by old-time Hebrew Schools, explains the creative energy of many ex-St. Louis Parker's.

How else do you entertain yourself when you're confronted with such boredom?

The list of attendees includes Ethan and Joel Coen, writer Neal Karlen, and possibly Thomas L. Friedman (at least, several of his friends went).

P.S.: Here is Neal Karlen's review of the movie, in The Washington Post.

Pop(Up) Goes the Neighborhood

Teardown-Lite

What do you get when you combine a high-demand, close-in neighborhood, smallish existing housing stock, and small city lots (typically, 120' x 40')?

Not tear-downs, because of the lot size.

And not bump-outs, for the same reason (there'd be no yard left).

Give up?

Pop-up's.

As in added second stories.

One of the areas where this trend is well under way is in St. Louis Park's Fern Hill neighborhood -- specifically, the west side of it (roughly between Monterey and Highway 100).

This six block stretch is prime territory for pop-up's because these blocks are full of smaller, $250k-$350k homes -- yet homes just to the east go for $400k-$600k (and sometimes much, much more)

The pop-up's are simply closing the gap.

Over time, this trend is driving all of Fern Hill up . . . literally.

Overdue Vacation?

Florida vs. Nevada

I was puzzled when my office receptionist asked if I was going on vacation.

It took a second to figure out, but it turns out they'd overheard me say I was "going to Florida" to meet my client.

As in Florida Avenue South, in St. Louis Park's 2nd alphabet.

I told them that if I had the time, I'd much rather go to Nevada (about a half-mile west).

New Construction: Condo's vs. Rentals

Pendulum Swings Towards Rentals

[Editor's note:  this piece was originally posted last weekend.  I'm "popping" to the top of the list because it was lightly read before being buried by subsequent posts.  If you read it then, please just skip.]

It's time to accept that home ownership is not a realistic goal for many people and to curtail the enormous government programs fueling this ambition.

--Thomas J. Sugrue, "The New American Dream: Renting"; The Wall Street Journal (Aug. 15-16, 2009)

Five years ago, the project (pictured above) now taking shape at Excelsior Blvd. and France Ave. in St. Louis Park, called "The Ellipse on Excelsior," would have been condo's.

So would a new, six story apartment building called "Solhem" in the middle of Uptown. In fact, Solhem originally was a condo project.

Less than a mile west, "2626 West Lake," developer Michael Lander's 4 building, 70-unit condo project, never broke ground, due to disappointing pre-sales. The lot sits empty today.

Across the Twin Cities, there are countless more examples of the housing pendulum swinging from condo's back to rentals.

What's going on?

I think there are three factors:

One. It's easy to forget, but there were thousands of condo conversions locally from roughly 2002-2006.

Outfits like Financial Freedom Realty are long gone, but they effectively drained a good chunk of top-tier apartments from desirable neighborhoods near the City Lakes (unfortunately, then they kept going, and started converting increasingly mediocre apartments to condo's).

So, in a sense, the new rentals being built now are merely replacing inventory that was previously lost.

Two. Setbacks in the stock and housing markets have left many people -- particularly older people -- gun-shy (if not shell-shocked) about holding big-ticket assets.

By contrast, renters don't have to worry about the value of their assets tanking. Nor do they have to worry about not being able to move when they want, because they can't afford to write their mortgage company a big check at closing (I've yet to hear of an "underwater" renter).

Unfortunately, avoiding an asset class after the bust smacks of "buying high and selling low."

Three. New rentals are what the banks are financing.

Which really just begs the question: 'why?'

Because there's demand for rentals, while condo sales are soft.

Seeking "Financial Freedom"

I think Sugrue and others are wrong that renting has replaced owning as "the new American dream." Just as "no one washes a rental car," no one takes the same pride in a home that isn't really theirs.

Rather, the mindset of the "rental converts" I know is that they simply want less risk in their lives, and to be off the financial roller coaster.

But Sugrue is right that single family ownership has been the beneficiary of a welter of government programs, dating back to the 1930's, that have collectively stimulated demand for housing.

Removing those, whether for financial or philosophical reasons, would make home ownership less attractive.

P.S.: I always thought a more fitting name for "Financial Freedom Realty" was "Financial Slavery Realty." At least, that's what I'd call owing more on your mortgage than your condo is worth, and not being able to afford to move.

Home on a Diet

Inflated FSF: 'Told You So'

Where: 29xx Quentin Ave. South, in St. Louis Park's Fern Hill neighborhood

What: 3 BR/3BA Cape Cod built in 1936

How much: asking $349.9k

When: (re-)listed Mon. (Aug. 3)

You've probably heard of home expansions. But have you ever heard of home contractions?

This one did.

When the home pictured above first came on the market more than a year ago, it was billed as 3,937 FSF. After showing the home, I opined that that was dramatically high ("Too Good To Be True"; 7/26/2008).

Well, I was was right.

After six months on the market, the listing expired in January.

Then, yesterday, it re-appeared.

New Realtor. New asking price ($349,900). And, drum roll . . . new FSF: 2,754 -- or 30%(!) less.