How is Northfield faring in the housing crisis?

Note: I’m trying to get a picture of the nature of the housing market in Northfield. I talked to Mary Schmidt this morning but will be speaking with other people throughout the day on the matter. There will be updates attached to the bottom of the original post throughout the day. (Update log: 10/20 2:30 p.m., 2:45 p.m., 3:30 p.m., 5:40 p.m.; 10/21 6:15 a.m., 7 a.m.; 10/22 1:15 p.m., 4:00 p.m.)

Steven Schmidt Construction Inc., which owns Schmidt Homes on Armstrong Road, has built one house this year, Mary Schmidt, director of marketing, said on Monday.
Five years ago, the business sold upwards of 30 homes in a year, Schmidt said.
The 27-year old company is surviving, however, by providing another service that’s in higher demand now than in boom times: Remodeling.
“This year, we’ve probably done work in about 20 homes,” Schmidt said. “That work ranged from building a deck to completely re-doing a kitchen to building an addition.”

Those projects ranged in cost, she said, from about $10,000 to more than $100,000. As a wild guess, Schmidt estimated the amount of remodeling work to be about 20 percent higher than at the height of the housing market.
In a slow market, however, the kinds of homeowners paying for remodeling are fairly specific.
“We’re finding that people who plan to stay in their house for a longer period of time are the ones putting money in their home,” Schmidt said.
Younger homeowners who might move are generally not investing in their house right now, she said. In a better market, younger homeowners might have done so simply because houses were appreciating in cost so rapidly.
“Back then, you could put $10,000 in and make $15,000,” she said.
Despite the success the company experienced in the housing boom, Schmidt said she believes companies like the one her family owns are becoming better when faced with hard times.
“Yes, it’s worrisome but, we’re confident we’ll come out of it and I think we will all be the better for it,” she said. “Nothing is going to be the way it was during the housing boom, and I think that’s a good thing.

Question: Who will talk to me about their experiences in Northfield with real estate and foreclosure? Email me:

Update 2:30 p.m.: Annette Frandrup-Frie, office manager and Broker for Edina Realty’s Northfield and Faribault offices, said the company is still selling houses, but homeowners are facing stiffer competition.
“We have a saying in our office that the seller’s house must win the beauty contest or the price war,” Frandrup-Frie said. “Our Northfield office is doing well, although we are seeing the lower priced homes in good condition selling best.”
The Northfield office has participated in the sale 359 homes this year, she said. Last year at this time, it participated in 252 sales. Frandrup-Frie said more information about Edina and the market is online.

Update 2:45 p.m.: Linda Seebach, RepJ’s collaborating editor, asked me to find out if Schmidt Homes had to cut back on employees. Here is Mary Schmidt’s reply: “The number of our employees has already been dramatically reduced. We had 18 people total, six in the office and 12 carpenters. Currently, we have four full-time and two part-timers in the office and six full-time carpenters. Some people left on their own and others were laid off.”

Update 3:30 p.m.: Annette Frandrup-Frie answered the following question, which reader Anne Bretts asked. Question: “Are Edina’s house numbers all from Northfield? Are there more sales in other cities? That number seems high for just Northfield, and higher this year than last seems odd, unless it includes a lot of foreclosures?” Frandrup-Frie’s answer: ” It includes a mix of everything. My agents will take buyers everywhere and look for buyers for the Northfield homes everywhere. Sometimes we have to sell homes in other communities so they can buy homes here, too.”

Update 5:40 p.m.: Realtor Millie Berg of Coldwell Banker said one of the reasons the number of pending sales at real estate agencies in the region rose recently is because of a trend in “corrected” sales pricing, which basically means some people have begun to sell their homes at a lower price.
Despite the rise in pending sales however, Berg said the real estate market is in its worst condition since she entered the industry more than 30 years ago.
“I’ve never seen anything like it,” Berg said.
Mainly, she said, the trouble seems to be in reassuring consumers who have lost confidence in buying a house.
“People take a lot longer to make up their minds,” she said. “We just don’t have people with the confidence to go forward. A lot of people are concerned about their jobs.”
Berg said Realtors attempt to re-instill confidence by answering questions and using a variety of statistics. But, she said, positive news can take a while “to sink in.”

Note: I found some statistics online here.

Update 10/21 6: 15 a.m.: Thank you Linda, for seeing the labeling error in my chart. I have corrected it. Len, the online database appears to be incomplete when I search for months beyond July. I might travel to the office in Faribault today and see if I can get more current information.

Update 7 a.m.: Len, here are two more charts that should help answer another one of your questions. Note: these graphs are for rough comparison purposes only. After looking through the Assessors Office online database more thoroughly, I realized the circumstances of the individual cases filed under “legal takings” varies greatly.

Update 1:15p.m.: Peggy Hoffman, vice president at Community Resource Bank, told two mortgage lending horror stories on Tuesday afternoon when asked what the home-buying process is like today. But the moral of those stories was “buyer beware,” not “blame it on a bad economy.”
In Hoffman’s stories, a person failed to get the best deal on a mortgage because he or she had not found a trusted broker.
“You can still get a mortgage with zero down payment,” Hoffman said, adding that finding a trusted lender helps someone get the best mortgage plan for them.
Of course, she said, most mortgage insurance companies are now doing extra to help home buyers stay out of financial trouble as well. (Anyone who puts less than a 20 percent down payment on a house needs to buy mortgage insurance, she said.)
Hoffman said she sometimes receives dozens of emails in a day from mortgage insurance agencies listing new policies. In general, she said, home buyers have to meet stricter credit requirements than in the recent past. Also, nearly all insurance companies have stopped insuring “jumbo” mortgages, which are for loans greater than $417,000.
Current homeowners and “investment property” owners (landlords), however, are perhaps the people who are seeing the greatest changes in their mortgages, Hoffman said. That’s because some properties are now are worth less than what people paid for them, which can make them impossible to refinance.
Hoffman said Community Resource Bank is doing OK despite the national economic crisis and is too small to have many of the problems larger banks are experiencing now, since those banks had many more large investments.
On a positive note, Hoffman said that since the prices of houses have dipped so low, “it’s a great time to buy.”
She said quite a few Northfield properties are eligible for a long-standing rural development government assistance program. With that program, she said, homeowners can step in to a new house for a few hundred dollars in some instances.

Update 4 p.m.: Note: The following is a message emailed to me from Annette Frandrup-Frie, office manager and Broker for Edina Realty’s Northfield and Faribault offices. Mrs. Frandrup-Frie wanted to clarify figures posted in the comments section that she believed were misconstrued. I plan to talk more here about Mrs. Frandrup-Frie’s concerns with information posted by commenters.

“These facts and figures are just not right. MLS numbers can be pulled up in many, many ways. I just pulled up the pendings and solds in Northfield area this year and it was 215. In Rice County, it was 305, without Northfield’s numbers even included. This number is also just homes that are on the MLS. I did not include commercial or lots.
The Northfield office does not just list and sell in the City of Northfield. There are many sales outside of city limits too. As I stated earlier, the foreclosure listings we service are all over. They are in many cities and communities. So, it is not correct to subtract the forclosure sales from the City of Northfield of sales since they weren’t in the City of Northfield.
Also, to make it sound like it is only 2 or 3 per agent is just wrong. I don’t even have 35 agents. Some of these people are assistants, employees etc.
I just checked and Jesse’s numbers of foreclosures that he sold in zip code 55057 were only 11 since 1/1/2008. The rest came from areas outside of the 55057 zip code.”


  1. Holly Cairns said:

    Excellent! Great, Bonnie! Mary is a sweet person who’ll be a great resource for us.

    October 20, 2008
  2. Bonnie Obremski said:

    Thanks Holly! Mary Schmidt was exceptionally helpful. She also said that she believed Northfield has not seen as many foreclosures as some other parts of the nation or region so I’m looking into that now.

    October 20, 2008
  3. Jessica Paxton said:

    What’s even more troubling is that while an established local builder (Schmidt Construction) is experiencing a significant reduction in activity, a Burnsville-based developer is once again attempting to bypass the Land Use Principles outlined in Northfield’s 2008 Comp Plan to annex 55 acres of agricultural land and re-zone them to make them part of the City’s “priority growth area” — in an attempt to accomodate the developer’s wish to build up to 200 new homes (2-4 per acre) on the site. Just what this town needs — more empty homes. Bonnie, I hope you will be attending tonight’s City Council meeting.

    October 20, 2008
  4. Leonard Witt said:

    This is not fully Northfield oriented, but it might shed a little insight into what is happening in Minnesota. I just found out the house we sold in Minneapolis in 2002 to move to Georgia is back on he market. From the photos it seems to be in even better shape than when we sold it, which we did one day after putting it on the market. Any how, the price now is almost exactly what we sold it for six years ago, in the very desirable Bryn Mawr section of Minneapolis. Here have a look:

    Is it a bargain now or was it over priced six years ago?

    October 20, 2008
  5. Leonard Witt said:

    Hi Bonnie and everyone else:

    I have a question — actually a few. How much do folks have to put down to buy a house now? And in this tight credit market, can folks find a lender? What are the lenders saying? Have any gotten the federal injection yet, do they expect it?

    Is there anyone out there in Northfield trying to buy a house? Is anyone willing to walk you through their experience?

    October 20, 2008
  6. Anne Bretts said:

    Leonard, your timing was great, although you might have done a bit better in early 2005, when things peaked (and we were buying). Housing prices took a big spike between 2002 and 2005, then fell off a cliff in late 2006, and by 2007 were back to about where they were when the spike started. Prices in some other areas, like California, actually have fallen even lower than they were before the spike. I think the Star Tribune has done a breakdown by zip codes around the metro area that shows some neighborhoods aren’t as affected by falling prices as others.
    On the other hand, I have talked to some wealthy developers who have bought up mansions for a song as their friends fell on hard times.
    I wish I could tell you the story from the buyer’s perspective. We are trying to sell and it’s a very, very tough process. My gut (and my neighbors) says that the market in Northfield would be even more saturated if a lot of people weren’t just delaying moving until the situation improves. Nobody wants to lower the listing price unless there is absolutely no other choice. For seniors who bought into senior condos, however, health problems and family circumstances may force them to sell, just as their stocks have tanked.
    This is a sad story, and one that won’t have a happy ending any time soon.
    It will be interesting to see the hard statistics on inventory and sales.

    October 20, 2008
  7. Leonard Witt said:

    I promise last questions from the Rep J. I noticed on the graph above that Northfield had more than 40 foreclosures in the first half of the year? And Faribault more than 100. What’s up with that? What’s happened since July? What was it like last year?

    October 20, 2008
  8. Bonnie Obremski said:

    Thanks for all of the good questions/insight. I’ll keep plugging away to find out more information.

    October 21, 2008
  9. Anne Bretts said:

    Bonnie, are those your charts? I didn’t see a source listed, so if they are yours and you plan a series of them it might help to make them comparable. Right now, the one for 2003 only goes to 4.5 while the 2007 chart goes to 25. It makes the visual comparison out of whack. It also would help to include the 12-month numeric totals for each year for the overall comparison.

    October 21, 2008
  10. Tracy Davis said:

    I spoke with a friend of mine, a local realtor, who checked the MLS and emailed me:

    According to the MLS there are 169 total current pendings and closings in Northfield this year. If you deduct the closings that were sold in 2007, it may be closer to 150. If Edina Realty has 50%, that would be closer to 75, which does seem low.

    Later: Actually they show 105 Buyer Sales out of that office for this year and 194 Seller Sales. Of the 194 Seller sales, 129 are Jesse Graber, who represents banks and the additional 65 are divided between their other 35 licensed agents(not even 2 each).

    105 plus 65 equal 170, not even 3 each.

    [This] all comes from MLS.

    Also, again, closed sales could number a bunch sold last year, but closed this year.

    October 21, 2008
  11. Bonnie Obremski said:

    Hi Tracy, thanks for the information. I don’t know if I’m quite sure how to interpret it, however. Could you give us the bottom line on what those figures could indicate?

    October 21, 2008
  12. Holly Cairns said:

    Earlier, using the Rice County Assessor’s site, I counted 65 foreclosures with a Northfield address, Oct ’07 to Oct ’08. Those were sales, I am supposing.

    As Len says, I see 40 Legal takings, Northfield address, this year before August.

    Comparing your charts, there were 14 legal takings in 2003 and 62 legal takings in 2007 (Northfield address). Wow. Ominous trend. The “Corrected sales pricing” Millie is talking about must include a lot of dirt cheap houses (probably some of those had a few kids’ shoes in the closet, left over due to hasty retreat).

    Population totals, comparison:

    Northfield population July ’07: 19,331

    Faribault population July ’07: 21,953

    Only a slightly higher population in Faribault, but triple the foreclosure rate.

    This may be a federal problem, but there will be Minnesota families out on the streets, needing assistance. Perhaps the Federal Government should pump money into our State Governments, too, as well as into the banks.

    October 21, 2008
  13. Holly Cairns said:

    Hmm. Tracy’s comment leads me to think foreclosures do “factor in.”

    If Jesse’s sales are truly bank sales, and if we compare bank sales to total sales, that means foreclosure sales represented 66% of total sales at Edina for that time period. Right?

    On a side note: As for those other 35 realtors: Seems to be a little unbalanced.

    October 21, 2008
  14. Holly Cairns said:

    As of this August
    post, the Minnesota counties with the highest foreclosure rate: Dakota, Wright, and Scott. I wonder if those counties still lead.

    October 21, 2008
  15. Holly Cairns said:

    Ah, I see Minnesota has already received
    federal funding
    for foreclosure problems– most of which seems to be for demolishing and buying land, etc.

    The article does mention financial assistance for low to moderate income people…. I wonder how this will all be prioritized.

    October 21, 2008
  16. Tracy Davis said:

    Bonnie, regarding the interpretation of the info I presented, I really couldn’t hazard a guess. At this point I’m just acting as a conduit and am not actively trying to get my brain around the information as I’m swamped at work again.

    October 21, 2008
  17. Mike Zenner said:

    Below is a good web site that shows statistical data for cities across the country. There’s a chart showing Northfield’s housing prices over the last 5 years. Northfield did not experience a huge price boom like some cities.

    If we use the national historical ratio value of house price being 3.5x the local median household income ($57,000) then Northfield’s media priced house should be $199,500 which it looks pretty close at ~$202,000 the chart now shows.

    However, the income to price ratio in Northfield in 2000 was 2.86x=$142,900/$49,970. If we use this ratio then the Northfield median price BOTTOM would be:

    My personal guesstimate of bottom will be late next year at around $175,000 like it was in 2003. However, the price will most likely hover around this price for many years to come.

    October 21, 2008
  18. Bonnie Obremski said:

    Just a note to say I’ve posted eight updates on this story since Monday. The final update is a message from a Realtor who is concerned about misinformation spreading among the comments here.

    October 23, 2008
  19. Holly Cairns said:

    It’s nice Anne’s giving numbers out…. can she help us truly figure out what is happening in Northfield? I feel it is a “factor”.

    October 23, 2008
  20. Bonnie Obremski said:

    Hi Holly…to be clear are you talking about Anne Bretts or Annette Frandrup-Frie?

    The picture I seem to be getting so far is that “things aren’t that bad” in Northfield. I’m almost certain someone else out there might have a different viewpoint. I’m still searching.

    October 23, 2008
  21. Holly Cairns said:

    I was talking about the Annette Frandrup. Sorry!

    When you talk to her in the future, I’d like to hear the MLS data for:

    Total housing units in Northfield,
    Total sales Northfield (03)
    Total sales Northfield (07)
    Total sales Northfield (08) = 215?
    Total foreclosure sales Northfield (03)
    Total foreclosure sales Northfield (07)
    Total foreclosure sales Northfield (08)
    Sales compared to foreclosure sales Northfield address Edina office (08),
    and total foreclosure sales at Edina(08).

    Can she share that…?

    Can the housing market tie into fixing this problem? Can we pump money into this arena like we did the banks? I’m trying to see what is happening in the sales department right now instead of two years down the road.

    October 23, 2008
  22. Bright Spencer said:

    In answer to Leonard’s question, no. 4, we have been trying to look at a place that we
    are interested in, but cannot get a call back
    from the real estate salesperson, after three tries over two weeks. I wonder what is up with that?

    October 24, 2008

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