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By:  Erik Hare

Some people say that it’s a buyer’s market for real estate here in Saint Paul.  And as we all know, that means that the inventory of houses for sale is a bit higher than we’d like, given the number of buyers out there shopping.

Unfortunately, the problem is more than just the current inventory of homes. The city had a initiative called Housing 500 that encouraged the construction of 500 new units of housing in Saint Paul.  We continue that effort, we have been adding to the existing inventory at a considerable rate – and will continue to, as approved projects are finished up over the next three years.

How much additional housing are we talking about?

Fortunately, this is what the city’s PED does for the initiative, and they publish their findings in a great big set of tables called the “Housing Scorecard” (last released on August 17th).  I’ll do my best to summarize it for you, and try to make some conclusions.

First of all, a project listed is considered “closed” if it has been fully financed or a building permit issued – in other words, if it’s off PED’s “to-do” list.  That means they list a lot of projects that have closed, such as Gateway Village in 2003 or Mississippi Flats in 2002, that have yet to be completed and/or sell out.  To do a comprehensive study would be difficult, but I can take my own guesses.  They appear in this table which lists year, total units closed, my guess as to the percent left to hit the market, and the resulting number I think are left to hit the market:

By this count, in the next two years or so 3680 new units should be hitting the market.  Yes, I realize that some of these are pre-sold, and it’s impossible to determine just how many of those there are.   What is important is that whatever new construction we’ve absorbed, there is about twice as much underway to be absorbed yet.

We can make some guesses as to how many are Condo/Townhome, just by looking at the fact that 20% of them are Downtown – clearly, they will be Condos or rental. My best guess is that half will fall into the condo/townhome category, and that less than a third are pre-sold.  That means a ballpark figure of 1200 units per year hitting the market, about 600 of them condos.

But there is more to the report than just what has been approved by PED.  We also have units in “development”, meaning that a developer has been found.  And there are “pre-development” units, meaning they have a pretty picture, and “conceptual”, meaning they talked to someone about it (OK, I admit, those are my definitions, not PED’s!).  These add up as follows:

How many of these will really be built?  Hard to say.  But if only half of them are realized (and a solid third have a developer who has secured the site), we are looking to roughly double the amount hitting the market from the figures above.

Adding all of this up, it seems reasonable that about 2000 new units will be adding to Saint Paul’s inventory over the next three years, and about 1000 of them each year will be condos or townhomes.  These are ballpark figures at best, and many things can change the actual numbers.  But when compared to the 2087 houses currently on MLS for Saint Paul, 545 of which are condos, we can see that the inventory currently listed is in danger of being swamped by new construction.

What exactly does this mean?  Mostly, that we can expect to have a lot of new neighbors.  But more importantly, the market will at least have some trouble reducing the inventory of homes in Saint Paul over the next three years.