Apartment Construction Boom (2011-??)

[at40man]

You can't really compare a house in the Northeast suburbs to an apartment in one of the most urban areas of the city. That's just... wow. Other than that they are both places to live, there's nothing in common between those two housing choices. I'm sure you could find a house out there that would cost $1500 a month, but the people in Uptown aren't making that choice.

Yes you can. People have to make lifestyle choices. I used a spreadsheet to make the comparison of my various options, and assigned everything numerical monetary values.

I appreciate the sentiment to take personal responsibility, yet taken too far, it actually leads to complacency and shirking of responsibilities we have to one another.

My rule of thumb is that we have a responsibility to take care of ourselves first, friends and family second, and everyone else after that. That said, I am actively involved in my church community and do believe in volunteering our time, talents, and treasure ($).

The problems you mention about Wall Street don't reside entirely with Wall Street. This is inevitably what happens when business and government start co-mingling their interests. For example, look at CGI Federal's implementation of healthcare.gov. Had the process been open to competitive bidding instead of crony backdoor deals we undoubtedly would have a better website.

Mathematically, the entire concept of "The 1%" is flawed. That puts people making 340,000/yr in that bracket. 340,000 is well off, but if you live in CA or NYC, it doesn't stretch very far. I highly doubt that the 1% of people who make 340,000 are holding the rest of us hostage. In fact, the "1%" foot about 40% of total income tax revenue in this country, and the "5%" foot 60% of total income tax revenue.

[mplsjaromir]

I would be wary of buying any property that relies on cheap gasoline to be viable. I see too much of our development that is not accessible without the automobile. I am concerned for those who buy property that relies on a substance that is imported from halfway around the world. I recently purchased a modest home on a street that was a historical streetcar line, the home was viable before the automobile. It would likely be viable if the price gas would rise to $10.00 gallon. I guess we are all concerned about different things.

[FISHMANPET]

You make it sound like people are spending $1500 a month in Uptown because they don't realize there are houses in the suburbs that cost less, which is certainly not the case. I'm sure you can spend $1100 a month in Uptown and $1500 a month in the suburbs.

My rule of thumb is that we have a responsibility to take care of ourselves first, friends and family second, and everyone else after that. That said, I am actively involved in my church community and do believe in volunteering our time, talents, and treasure ($).

I find this point of view to be morally repugnant if for no other reason than we are all interconnected and it is not possible for a person to be %100 responsible for themselves. We are all responsible for each other. It's called a society.

[twincitizen]

You can't really compare a house in the Northeast suburbs to an apartment in one of the most urban areas of the city. That's just... wow. Other than that they are both places to live, there's nothing in common between those two housing choices. I'm sure you could find a house out there that would cost $1500 a month, but the people in Uptown aren't making that choice.

Yes you can. People have to make lifestyle choices. I used a spreadsheet to make the comparison of my various options, and assigned everything numerical monetary values.

I'm curious, what monetary values did you assign to the Walkscore of your residence vs. these urban luxury apartments? Bicycle infrastructure? Proximity to a transit stop with frequent service? Ability to walk/bike to the grocery store or local pub? Proximity to dense job centers if your current employment situation does not pan out? What is the net monetary value you assigned to not owning a car, yet still being able to do everything you want?

I'm sorry, but at first I assumed you were talking about owning a house in south or NE Minneapolis (cheaper neighborhoods, but still medium-close-in) or St. Paul, not someplace out near the beltway. Your comparison is crap. Are you even inside the 694/494 loop?

[mplsjaromir]

Mathematically, the entire concept of "The 1%" is flawed. That puts people making 340,000/yr in that bracket. 340,000 is well off, but if you live in CA or NYC, it doesn't stretch very far. I highly doubt that the 1% of people who make 340,000 are holding the rest of us hostage. In fact, the "1%" foot about 40% of total income tax revenue in this country, and the "5%" foot 60% of total income tax revenue.

Actually your math is very flawed. When someone is making more than five times the household median income ($68k/yr in NY and $67k/yr in CA) they are doing just fine. Making the claim that $340,000 does not go far in New York or California is laughable. Almost as laughable as comparing Oakdale to Uptown. Have fun being a chain restaurant aficionado.

[at40man]

You make it sound like people are spending $1500 a month in Uptown because they don't realize there are houses in the suburbs that cost less, which is certainly not the case. I'm sure you can spend $1100 a month in Uptown and $1500 a month in the suburbs.

Did you read my posts in their entirety?

To quote myself from earlier with additional emphasis: "There ARE reasonable rents to be had in Uptown. When I had been renting in Lowertown whilst in college, the rental market was still pretty weak and I lived with friends so the costs were still pretty low to live in Galtier! I just don't think luxury apartments offer particularly good value, nor make much sense for folks my age who are renting them. It is all a numbers game, in my opinion."

If you live in a luxury apartment, yet aren't able to save money - then there is a problem. And that is a situation I see people of my generation getting themselves into far too easily.

My rule of thumb is that we have a responsibility to take care of ourselves first, friends and family second, and everyone else after that. That said, I am actively involved in my church community and do believe in volunteering our time, talents, and treasure ($).

I find this point of view to be morally repugnant if for no other reason than we are all interconnected and it is not possible for a person to be %100 responsible for themselves. We are all responsible for each other. It's called a society.

You think it's morally repugnant to give of my time, talent and treasure secondary to ensuring my own needs for food and shelter are being met? If you don't take care of yourself and your own needs first, who will? I'm not saying NOT to take care of other people. I am saying that your primary responsibility is to ensure your own needs are being met. I don't want you to try and take care of my needs while neglecting yours. That's the epitome of a lose-lose situation.

You are right. We DO live in a society. A society is compromised of individuals, each with our own unique goals, circumstances, and talents. This nation was founded on the belief that the individual must be the master of his or her own domain. That's why we have property rights, as well as inalienable rights to life, liberty, and the pursuit of happiness. Your goal in life should be to achieve your own happiness without trampling on others pursuit of happiness. Only then can you truly start helping other people be happy, because you will know what it takes to make yourself happy. I get a lot of fulfillment being involved with my church's outreach programs - everything from making sandwiches for Dorothy Day Center to volunteering in soup kitchens. That's really outside the realm of the value of living in a "luxury" apartment as a millennial, though.

I'm curious, what monetary values did you assign to the Walkscore of your residence vs. these urban luxury apartments? Bicycle infrastructure? Proximity to a transit stop with frequent service? Ability to walk/bike to the grocery store or local pub? Proximity to dense job centers if your current employment situation does not pan out? What is the net monetary value you assigned to not owning a car, yet still being able to do everything you want?

As I stated earlier, I live 4 miles north of the 3M campus where I typically work, and reside near 36/694/120. I can't walk to the grocery store -- but the Cub Foods is within walking distance of work and each week 3M has Farmer's Markets. 3M actually has their own area providing various services, similar to a mini downtown complete with skyway system. I encourage you to visit the 3M campus sometime - it is a city unto itself complete with a skyway system and stores. Pioneer Press actually wrote about 3M's mini city recently.

I can and do walk/bike to the convenience store by my house, the nearby Caribou, nearby pizzaria, nearby DQ, and nearby bar. It takes me less than 10 minutes to drive my paid-off car to work, 20 minutes to get to downtown St Paul (40 minutes if I bike on the Gateway state trail), and 30 minutes to get to downtown Minneapolis on the express bus. In the winter, I drive my Honda to 3M which doesn't even have enough time to warm up. In the summer I ride my bike. Everything I need is nearby. Sometimes my consulting company has me come to their home office in downtown Minneapolis, in which case I take the 270 express bus from Maplewood. I'm not exactly residing in the boonies of Eden Prairie or Woodbury; I AM reasonably close enough to job centers if my situation falls through. I enjoy riding the bus, actually. When it is reasonably fast and efficient, it certainly beats the pants off of driving.

My cost of living is incredibly low. My cost of living when I resided in Lowertown St Paul was also incredibly low, because the rental market when I lived there was fairly weak. I don't think I could justify that expense anymore, due to the increases in costs of living in this area. I'd consider it if they do build the Gateway LRT. I don't plan on living where I am forever, either.

I will continue to drive home the point that it is a numbers game. If the numbers stop being in my favor in Oakdale, I will move to a location where they are in my favor. That's why I am no longer living in Lowertown. I want my cost of living to be low, I want to live close to work, and everything I want should be inbetween the two to maximize efficiency. I have found that location, and it is working well for me without useless amenities.

[twincitizen]

I will agree with you on one of your points, that there are "reasonable rents" to be had in Uptown and Loring Park; North Loop and CBD maybe not so much. That "reasonable rent", where you can get a ~600-700SF apartment with a balcony (or view), semi-modern amenities, underground parking if you want it, etc. is going to run you $900-1050/month today. There's a pretty huge divide between there and the $1400/mo for one of the new luxury places. I would also agree with you that no "Millenial" living alone, fresh out of college, should be paying that much for rent, unless they are making $60k or more right out of school. Did it occur to you that most of the folks renting these apartments might be making more money than you? Or perhaps living with a significant other?

I pay $750/mo now for a smallish 1BR with a balcony & dishwasher in a secure building (but no underground parking, community room(s), pool, in-unit laundry, etc.) and I'm right on 28th Street in Whittier, close to everything. If the new luxury units on the Greenway are an "A" location (I'd argue not A+ because transit is blocks away & still ~20 mins to downtown), then my location is still a solid A-. I just looked up the pay increases I could get over the next couple of years, and if paying the same ratio of income-to-rent that I do now, I could maybe afford to get into that $1000/mo range in a few years. A luxury apartment at $1400/mo is simply not in my future unless I change jobs...preferably to one downtown where I could ditch the car ownership for good.

[FISHMANPET]

Sorry, I'm having a really hard time reading this thread as anything other than at40man being butt hurt that everybody doesn't live like him and value the same things at the same level as he does.

[Nick]

Uggggggghhhhhh

[at40man]

Sorry, I'm having a really hard time reading this thread as anything other than at40man being butt hurt that everybody doesn't live like him and value the same things at the same level as he does.

That's news to me!

My point, however, is that it isn't a good idea for my fellow millennials live beyond our means:!:

I think this current luxury rental boom is reaching the point of over-saturation and will inevitably crash, with bad consequences. That's it!

[Tyler]

I think this current luxury rental boom is reaching the point of over-saturation and will inevitably crash, with bad consequences. That's it!

What consequences, exactly?

[VAStationDude]

Notice how the bad actors in the "enviable crash" are renters, not developers or bankers? Typical right wing class bias

[at40man]

Notice how the bad actors in the "enviable crash" are renters, not developers or bankers? Typical right wing class bias

Class bias? That cuts both ways.

If developers are over-developing, then that makes them bad actors. If the government and federal reserve continues to play with the money supply through quantitative easing, that also makes IT a bad actor, However, developers and bankers will react to what people think they want. If people are clamoring for luxury apartments, then they will erect luxury apartments.

But if an individual gets him or herself into a situation where their desires don't match their pocket book, I can hardly blame the developer. That generally falls on that individual's shoulders. I have a lot more sympathy for someone who falls on hard times if their bank screws them over even though they were living within their means. I don't have sympathy for the person (like my friend) who is $20k in cc debt but yet insists on living in an apartment building with concierge services and heated parking. I can pop on Craigslist right now and find plenty of affordable places in the Uptown area. Any honest person should know that they need to make sacrifices if their expenses outweigh their income. With software tools like Mint.com or Quicken, it is easier than ever to keep track of cash flow.

The Star Tribune published an article in August titled "How long can the apartment construction boom continue?"

10 years ago, we saw huge apartment buildings like the Falls and Pinnacle go condo. When I started renting in 2006, I was thrown all sorts of freebies to move in to Galtier -- a free month of rent, free parking for 6 months and discounted parking thereafter, etc which made it very attractive for me to rent. There was even rumors of Galtier converting more floors to condo. That trend has reversed in the opposite direction but the question is, for how long? This can't go on forever.

What goes up must come down.

[Nick]

Anecdotes aside, I just saw (on this site) a banner ad for Symphony Place saying units start at $1200. Doesn't seem to have specific prices on their website, but I think that's less expensive than a couple years ago if I remember my experience correctly. Er I guess that's also technically an anecdote. I see Marquette Place down the street is still starting at $1500 for a one bedroom.

[RailBaronYarr]

This thread hurts my brain.

[mplsjaromir]

Your friend is really dumb.

I imagine you are likely peeved that he or she has great stories of late night Uptown carousing, while your extreme couponing narratives do not share the same gravitas.

We get your point, you do not think people should make unwise financial moves. All generations have had people who made unwise financial decisions, not just millennials. I too am an advocate of people not doing stupid stuff.

[twincitizen]

Since Nick merged the threads, let's agree that the prior conversation about at40man's housing preferences and his concern for others' monthly budgeting is over. Let's all move on.

Burl Gilyard of TC Business has been writing a bunch of articles about the apartment boom. Here's the latest, focusing specifically on the condo market (or lack thereof): http://www.minnpost.com/twin-cities-bus ... win-cities

Basically, they're still saying the same thing: current sale prices for existing condos are not high enough to justify new construction.

Buried in the article was the tidbit that Sherman's apartment building at 324 1st St N (former Reserve condo site) has finally broken ground. I know we were all getting a little skeptical about that one.

Here's the previous TC Business piece: What's Driving the Twin Cities' Apartment Mania?

[John]

I live downtown in a middle class condo building, and the value of my property has gone up modestly over the last year.This suggests an improved condo market with a tightening inventory. But I doubt it's enough to create a boom in condo projects given the cost per square foot referred to in the article . I think if you look at the sales of Stonebridge Lofts, however, possibly the market can absorb a hundred or so units per year. My prediction is we will see maybe a few modest projects being announced downtown, but nothing like the scale or scope of the rental developments going up.

[twincitizen]

It sounds like the land acquisition costs would have to be favorable as well. Some of the earliest Mill District condo projects got the land free (or was it like $1) from the City. I have no sources on that...sorry.

[David Greene]

A good rule of thumb is housing should be less than 28% of income. For this example lets assume rent is $2000 a month. Extrapolating those two assumptions to monthly income is $7150 of monthly income. Really, that's not a huge income for a couple especially if they can ditch one car and their Lifetime Fitness membership.

I don't think most of the people moving into these places are couples. At least I don't see them at Flux, etc. $85k is a hefty salary for an individual.