Condominium Disequilibrium

Wedge housing has gone through a lot of changes since the neighborhood was platted in the 1880s. The first major change came after the Columbian Exposition of 1893. The "White City" of Colonial Revival style buildings made the fanciful, ornamented Queen Anne style unfashionable. By the early 20th century, the fairly new, large Victorian houses built along the streetcar lines in the Wedge were being abandoned by their original owners for newer homes in newer neighborhoods. Large apartments became the rage for upwardly mobile Minneapolis residents. On and around Hennepin Avenue, handsome brick apartment buildings starting going up. Many of these apartment buildings still line Hennepin, sharing the street front with commercial buildings.

In the early  20th century, two smaller apartment buildings were built on Emerson Avenue South near the corner of 25th and Hennepin: 2417 in 1905, and 2421, in 1907. 2417 contained eight units, 2421 had nine units. When new, they were the homes of the affluent. But as the years passed, the units grew shabbier, the maintenance minimal.  By 1970, the year that LHENA was founded, 2417 and 2421 had been made into one dwelling unit each, split up into 24 rooms with shared baths and kitchens, the equivalent of large rooming houses. The buildings had fallen into a serious state of disrepair with substandard living conditions for the numerous tenants.

2417-2421 Emerson Avenue South in 1978

In 1977, the two buildings were condemned. The next year, Kreisler Companies acquired the buildings and began rehab under the HUD Section 8 program for low-income housing. Each building was separated into a mixture of one-bedroom units for the elderly and two-bedroom units for families. A small children's play lot was added. The wooden fire escapes in the back were replaced by elevators. In 1979, applications were taken for low-income tenants, and the buildings became homes once again.

Twenty years later, when the condominium market was red hot, the buildings were converted into condominium units roughly the size of the original apartments. In 2000, units in the newly renovated buildings went on sale. Today, the units in these buildings are valued in the low-to-mid-$200,000s. For example, a 1800-square-foot, three-bedroom condo in 2421 recently sold for $246k ($135/sq.ft.).

2417-2421 Emerson Avenue South today

The Wedge has quite a few condominium units in a range of housing types from older duplexes and apartment buildings, to nearly-new construction. Currently, Zillow shows 9 comdos/townhomes for sale in the neighborhood. Five of these are pre-1970 construction; four were built after 2000. Two of the four newest condos are in foreclosure.

A 2bd/1ba, 950 sq.ft. condo in this building on Lyndale is listed at $175k

The least expensive condo ($99.9k) for sale in the Wedge is a 1bd/1ba 568 sq.ft ($176 sq.ft) unit in a 1959  2-1/2 story walkup on the 2700 block of Aldrich. Nearby on the 2800 block of Bryant Avenue is the most expensive at $450k. Built in 2005, this top-story 3bd/2ba, 1700 sq. ft. condo has been on the market for nearly 10 months. The price has been lowered by $15k since it went up for sale.

Listed for sale at $450k: The upper unit in this 2005 condo building .

Why is this condo so slow to sell when the housing inventory in Minneapolis is at its lowest since 2004?   For one, if a buyer can afford a home in the $400-450k bracket, there are some potentially more attractive options. For example, in nearby Whittier neighborhood, a 1912 foursquare house with 4bd/1.5ba, 2300 ft./sq., went on the market a few days ago for $410k. They are very different kinds of housing, but they are priced similarly, of similar size, in similar condition, within walking distance of each other.

You can bet that the Whittier house will not be on the market for nearly a year. One reason that the house will sell fast while the condo won't is the difference in lifestyle and taste of potential buyers. Condominium buyers can find similarly priced units in quieter, less congested areas of the city. Another important reason is value. The condo at 2421 Emerson of similar size mentioned above sold for $200k less than the Bryant condo. The 1907 building and the 100-year-old house in Whittier with original woodwork and appointments are simply more inviting to many than a modern minimalist apartment.

Dining area in the 2005 modern condominium

Formal dining room in the 1912 house.

Then there is the comparative cost of ownership. Monthly expenses for the condo will set a  new owner back about $2600 a month, not including utilities, whereas the house would cost about $1800--assuming similar down payments and mortgage interest rates.

When the housing the market tanked in 2008 after the global banking crisis, the real estate market went cold. It's gradually recovering, but is inhibited by the big banks' disinterest in lending money to individual homeowners when they can make so much more lending to corporate developers. The banks that were "too big to fail" are backing big, new developments, like apartment and condominium buildings and hotels.

According to Broker Sandy Loescher of Sandy Green Realty, another factor in the slow recovery of the housing market has been the effect of the banking crisis on those middle-aged people who lost their investments and homes at that time. Parents who once could afford to help their children with down payments for real estate and help paying off student loans now need financial help themselves.

One can't help but wonder in this volatile economy where all this is going. How long will the banks and government keep promoting the big and corporate over the small and individual? As long as the current group of officials remain in office.

 --T.B.