City's hard lesson: Even a $1 price tag won't sell these houses
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posted by Bob at Monday, December 28, 2009
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Monday, December 28, 2009
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18 Comments:
Homes offered for rock-bottom prices in August sit empty
By Christopher Snowbeck
csnowbeck@pioneerpress.com
Updated: 12/28/2009 07:53:02 AM CST
When you can't sell a home that you've priced at $1, what's your next step?
Cut the price to 50 cents?
Try paying someone to take the house for a buck?
St. Paul officials have learned some disappointing — but not surprising — lessons four months into a project to sell a cluster of city-owned homes at prices ranging from $50,000 all the way down to a buck.
In August, the city's Housing and Redevelopment Agency sponsored a series of open houses for the HRA-owned properties clustered along the west end of Fourth Street in the Dayton's Bluff neighborhood. City officials said they would sell only to buyers who showed they could finance extensive repairs that satisfy both city rules and historic preservation guidelines.
But despite heavy turnout at the open houses, the city has received only three purchase proposals thus far, said Sheryl Pemberton-Hoiby of the city's Department of Planning and Economic Development. Only one of the proposals, she added, likely will result in a sale.
Potential buyers have been daunted by the scope of rehab work needed on the houses, said Ellen Biales, aide to City Council President Kathy Lantry. Another concern: Many of the properties lack off-street parking.
"People want garages," said Pemberton-Hoiby.
As the number of foreclosures has skyrocketed in recent years in the Twin Cities and across the country, cities like St. Paul have taken on the role of buying houses to address a sharp increase in
vacant properties. Those vacancies can contribute to a downward spiral in values for other homeowners in the neighborhood.
The result is that St. Paul now finds itself with not just the 11 homes in Dayton's Bluff, but another 59 properties spread across the city. About 30 of the homes likely will be demolished, but city officials hope to sell the others and promote neighborhood redevelopment efforts.
The Dayton's Bluff program — known as the Fourth Street Preservation Project — was meant to test strategies for how the city might best sell its homes. The key lesson learned thus far: More investment in rehabilitating the homes on the front-end is needed to entice buyers.
As one example, St. Paul is doing some initial surveying work to show potential buyers options for creating off-street parking at some of the Dayton's Bluff homes. The city also is considering improvements to exteriors and mechanical systems in the houses.
"People want to see the city's involvement — that they're not the only ones taking on the risk," Pemberton-Hoiby said.
With the additional investment, those $1 prices likely will be a thing of the past as the city looks to recoup the money.
In one respect, the city's effort has coincided with some helpful trends in the local housing market, where a lot of the activity among buyers has been focused on low-price homes.
Between December 2008 and last month, more than 12,000 homes priced at $120,000 or less have sold in the 13-county metro area, according to the Minneapolis Area Association of Realtors. That's a nearly 95 percent increase over the number of sales in that price bracket during the previous 12-month period.
Plus, there's been added incentive in recent months to purchase in Dayton's Bluff and nearby neighborhoods. In April, the Pohlad Family Foundation announced a $1 million grant to provide buyers in the 55106 ZIP code — an area that includes Dayton's Bluff — with $8,000.
But all of the foundation funds have now been committed, said Zong Vang of Dayton's Bluff Neighborhood Housing Services of St. Paul, the nonprofit group that is managing the grant money.
And the demand for low-price homes has been stoked by a huge supply of the properties, meaning buyers looking for discounted homes have had a lot of choices. The city's properties have been going up against some tough competition in the under-$100,000 price bracket, said Brad Griffith, an agent with Edina Realty who has worked with buyers and sellers on St. Paul's East Side.
Some buyers who've been looking for deals in homes priced at $25,000 to $40,000, Griffith said, wind end up opting for higher priced homes — say about $80,000 — when they see how the higher price tag translates into significantly less rehab work.
Griffith said he's not familiar with details of the Fourth Street Preservation Project, but suggested that city officials might want to consider working with local real estate brokers to market the homes. That way, the homes could be listed on the Regional MLS of Minnesota, a propriety database used by Realtors.
"The MLS is helpful from the exposure standpoint," Griffith said.
Better marketing would help the Fourth Street project, agreed Chuck Repke, executive director of the Northeast Neighborhoods Development Corp. But there have been other challenges.
Many recent buyers of homes under $120,000 are investors looking to rent the properties or sell them following rehabilitation. The city wants to sell to buyers who will live in the properties.
Repke said he agreed with the city's focus on owners who will be residents, but noted that those buyers constitute a much smaller group. Another challenge: Potential buyers are having trouble finding loans to finance the extensive rehab projects that are required to live in the Dayton's Bluff homes.
"I think you can stimulate people to buy St. Paul," Repke said. "Before all of the markets collapsed everywhere, we were finding people making that decision to come back to the urban core. ... If the credit market changes on some of this stuff, I think there will be buyers."
Pemberton-Hoiby, the city official who is project manager on the Fourth Street effort, said the city has not marketed the homes through the MLS because the sales come with so many strings attached in terms of rehabilitation requirements that the houses aren't standard listings. Even so, she said, the city is looking at ways it could compensate real estate agents for bringing buyers.
While city officials would have liked to have sold some of the 11 homes by now, Pemberton-Hoiby said the properties in Dayton's Bluff and those elsewhere in the city continue to offer chances at improving neighborhoods.
"Most of the properties we're picking up haven't been rehabbed in a long time," she said, "if at all."
Christopher Snowbeck can be reached at 651-228-5479
What the hell did they expect with the code program they have had? Sure the code compliance thing isn't the whole problem but it is a good part of it and city leaders brought it on to themselves. Now they have to live with it.
Don't worry one bit - Invest St. Paul will save the day. Things will turn around soon.
I see Repke has his big mouth in the middle of things as usual! I'm suprised the Mitchell spin machine was not mentioned as well since it's the DFL hackery that he gets elected to office that caused all this mess.
Sure it will turn around, they will just use more city money to make it look like people are investing in this dead city.
Just tear them down and stop losing money on these old dry root and the black mold in the walls and between the ceilings.
Nobody want these health hazardous homes, people are better off having new homes built in there places.
About the "grant money"
But all of the foundation funds have now been committed, said "Zong Vang" of Dayton's Bluff Neighborhood Housing Services of St. Paul, the "nonprofit" group that is managing the "grant money".
Chuck Repke is in business as a nonprofit, they are the ones that can make a million a year in these so called "Non Profit Corporations
People can find better deals than to rehab to the expensive standards the city demands. The city is going to have to swallow the $20K teardown consts on some of these houses.
You may as well just flush your money dowen the toilet and spare yourself the grief from the inspectors. These St. Paul people are some of the craziest I've seen. People put a new window in their home and the inspector signs off on it and says it's Ok and then another inspector comes along a few months later and tells you the window is an inch under the code size and they want to condemn it and throw people in the street in the middle of wimter if you don't put in another new window. You would have to worse than stupid to invest in this city.
St.Paul needs new city council members.
Change things around. I planning
on running . In ward 5.
They need not a yes man or woman.
change the code back. Stop spending money for the low income.
They donot help the city. They cause the taxes to go up.
One reason is that they do not paytaxes on housing or things.
They get everything free.
They can not pay to rehab a house.
They spwnd their money on drugs or
cigs. Let the taxprayer pay for everything they need.
The city built new low income apts. for them and they trash them. Give free place to live.
They will trash it.
Make the taxprayer for more service
and pay for nonprofitorg. to help.
That way we can't get our streets plow and deice. Help people with sideways to clean, or the corners
clean so, we see"if a car is coming down the street."
I note that ward 1 has ice melt on the streets. But in ward 5 there more icly streets. They our plow when you can public works and bitch about. After four times the snow falling. They only plow once
down my street. And, no ice melt.
You have to dive 5 mph down the street, then you can stop at the sign. And how many days after last snow fall. Three days.
What is about 200 nonprofits for the so call poor. And if try to get help form one the nonprofits,
They will say we don't have any money. Stop pay the top people
of the nonprofits $120.000 ayear.
cut some of the nonprofits
like there is three nonprofits
building low income apts on Un and
Dale. The top people of the nonprofits make $90,000.
And the mayor only makesabout $125,000 a year.
That how all get f---. By the city
council
Thanks for Posting Put the Vido from Kare-TV The 2 Propertys on Bates and Conway are 3 Houses from Affiant Court Appeals A09-2031
Fight Back Its your tax Money
Hey Who is Chair of HRA DAVE THUNE of course with Buddy REpke
http://www.wzzm13.com/news/watercooler/story.aspx?storyid=117057&catid=82
Suburban housing standards are as strict and more strict than St Paul- its why these so call property investors buy here but live elsewhere. That pattern has led to these and many other houses falling into a state that is uninhabitable for humans.
People will live in a cardboard box with an electric heater if the price is right. The city's job is to write and enforce code so that people are not living places that are a health and/or safety challenge for people. Its not the city's job to turn a blind eye to investors who let their property go into a state of disarray but still rent it out. There's your conflict. Should the codes be as little s possible as to generate investment and profit, or should they set minimum standards for health habitability? For most, its a no brainer, for others, its about the money and the hell with the safety and health of people.
Nonprofits.
Nonprofits are organizations that do not distribute that profits among shareholders or owners, it goes toward their mission. Period. The mission of a nonprofit varies as it usually addresses an issue the government does not with a specific program.
I'd like to know what top people at local non-profits are making $90,000. Unless you're talking about a major org like the Red Cross, Salvation Army, Minneapolis Urban League, hospitals, health organizations, or one of the private foundations like Bremer or Wilder. Comparing their scope and salary to those in the private sector will show you that they make a fraction of their counterparts.
Paying the head of $500,000,000 operation with thousands of employees, $125,000- after he/she publicly applies for the job is good deal for the people. That's .00025 percent of expense. For the guy who barely wrote at 8:55am, that's 1/4th of 1/1000th of the budget. What if Wall Street paid their paper shifters that kind of money?
Eric
If 8:55 is going to run for council in the 5th ward. I suggest that he loose that hatred for poor people. Most poor people are working poor. Thy work minimum and low wage jobs.
The 5th Ward is not all Como. Its part of Frogtown, the North End and East Side. You're going to go to these people and say get rid of the poor, instead of demanding more jobs and transportation so that they can improve their lives for themselves and their family? You'll never make it through your first public announcement.
I hope your verbal communication ability is better than your written communication style. Your points come across as being bitter and full of classism. However, your writing expression exposes you to be lacking class yourself.
And you start off by informing us you're going to run for office but, you chose to stay anonymous and not stand by your words. If you can't stand up to your own words, why should anyone think you're going to stand for them and give you any support?
Eric
Well well well....the loud mouth is back and the first thing he does is start bashing people over their communication syle.
Well well well....the loud mouth is back and the first thing he does is start bashing people over their communication syle.
10:49 PM
You wrote this because...? You thought it would add anything to the discussion? In one run-one sentence, you do nothing but insult me, and then lie.
I've got two posts and the first thing I write about is housing standards. I then write about non-profits. I then write about non-profit salaries and then end the post.
In the next post I start off writing about the poor and who they are. I then go and challenge the previous poster on his stated goal of representing a ward with a high number of the people that the poster has stated he despises.
I then address his demonstrated communication style. A person who wants to represent others need be articulate and literate enough to communicate the needs, priorities and values of that group he/she represent. So, ones ability to communicate clearly is fair game for scrutiny.
You'd been better off staying quiet but, again, when you're comfortable hiding in the shadows of anonymity taking cowardly shots, there no telling what you'll say.
Eric
Just and FYI - the bulk of the houses that the City has for sale on Fourth Street were bought on the open market. They were houses that were for sale and anyone could buy. As those of you in the business know, there are a ton of foreclosed houses out there and the City is attempting to pick up some of these that are at rock bottom prices - none of them have been short sales - all of them were already back at the bank.
Yes, as Sharon points out NENDC does development work on the East Side both with the City and with private parties. I do have my real estate brokers license so that the non-profit can get paid like any other for profit entity would get paid for buying and selling real estate. Instead of us asking for hand outs from the City or from foundations, we get paid like any other real estate broker. Get your pencils ready, and you figure out the commission on the sale of a $20,000 house at 3%... We aren't making millions on it Sharon...
As I said in the article I think that the houses are going to have to be rehabbed before they are sold.... and that will cost some money. The monies being projected to be used on this are from the Federal Recovery Act.
JMONTOMEPPOF
Chuck Repke
Is this really Saint Pauls future?
Link above
Oh, Eric:
"Suburban housing standards are as strict and more strict than St Paul"
Right, but in all the suburbs I knmow of including my own the city has CLEAR UNAMBIGYOUS RULES that they follow EVERY TIME. Saint Paul DSI literally makes up the rules as they go along.
"ts why these so call property investors buy here but live elsewhere."'
Remember when "absentee landlords" were the big plaig that the city had to defeat for the citys own good? Now they are mostly gone, and the city is still piece of shit.
"People will live in a cardboard box with an electric heater if the price is right."
Right. So fucking what? If a person can afford a cardboard box, and prefers that to living in a homeless shelter, so what?
Of course the cvardboard box is a straw man, Eric. We are not talking cardboard boxes, we are talking housing that may not be up to highland park standards but is affordable, adn would NOT be affordable if it were brought up to highland park standards.
This is EXACTLY why it is impossible to find a decent place to live in Manhattan if you make less than half a million a year, even though there are miles of shithole buildings begging for rehab - because nobody can deal with the burocracy.
You will get your flint michigan, Eric.
I left the flaming shithole of Saint Paul. I ffeel nothing but pity for your poor suckers that remained, and nothing but hate for wankers like eric who gwet their little power rush by playing their little part in the system.
You're like the capos in the concentration camps. You get your rocks off with having power - but they'll get you soon too.
What 'power' is this you talk about? By the way, St Paul is one of the best governed cities in America according to the experts who observe and critique this at Governing magazine. Also, the finance experts still have our bonding rate at very good. Flint is on the other end of that with about 300 cities in between.
Being loud and ignorant is not a good look for you.
Eric
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