Fewer people bought houses and condos in the 4th quarter of 2005, but new construction increased, according to a city report. Minneapolis saw more jobs, but inflation outpaced wages. And while 2004 was a good year to be a real estate agent - their income nearly doubled - those days may be coming to an end.
The following compares the fourth quarter of 2005 to the same period of 2004, except where noted. Past figures are adjusted for inflation.
A lot of new construction began, the vast majority of it condos and apartments. (Only 42 of 814 construction permits issued were for single-family homes.)
The jump in construction came after a sharp fall at the beginning of 2005 (only 111 permits in the first quarter of the year) and a steady increase throughout the year.
Those multifamily projects were 26 percent more costly to build - the average cost rose from $153,400 to $187,400 per unit. Construction also included hotel and office renovations, such as the $10.7 million Chambers Hotel.
No projects over $1 million were begun in Southwest Minneapolis.
Condo sales down, rental steady
Far fewer condos were sold in 2005 than at the end of 2004 (87, compared to 565) and the total number of housing sales dropped 40 percent. Condominium units lost value (almost $11,000 on average), while the average single-family home gained $13,600 in value.
Scott Parkin, a Realtor with S.R. Hoffman and Associates, acknowledged that the overall market has slowed, but called it “all systems normal,” compared to the condo-crazy days of recent years. “The market has been good for 10 years, and it's still good, but it's going to slow down,” he said.
The rental market still favors the landlord - just barely. The vacancy rate for apartments was 4.8 percent - anything under 5 percent is considered a landlord's market.
The average rent ($826 per month) remained steady throughout 2005.
Office rebounding, retail not astounding
The booming Downtown office market continued to strengthen, with the vacancy rate for the central business district (CBD) at its lowest since the end of 2003, when it was 16.5 percent (No current CBD figure was given.)
Retail did not fare as well; while the CBD vacancy rate decreased to just over 10 percent (it was nearly 15 percent when the year started), leasing prices fell sharply, from $27 to $16 per square foot.
Jobs: hot and not
Unemployment was at its lowest since 2001 (3.7 percent) and the city netted 1,300 more jobs, but the average wage did not keep up with inflation.
Between the beginning of 2004 and the first quarter of 2005, real estate services was the place to be: 450 real estate jobs were created, and wages almost doubled, from $654 to $1,212 per week. Parkin noted that this, too is cyclical, and that the ranks of Realtors would thin as the market slows.
Other areas of job growth included transportation and warehousing (370 jobs), administrative and waste services (880 jobs) and management of companies and enterprises (640 jobs).
On the other side of the coin, there was considerable job loss in the information sector, which includes publishing and telecommunications, and the utilities industry, where workers' wages dropped from $2,246 to $1,597 per week.