Why are there so many cheap townhomes in Eagan? (Burnsville: for sale, foreclosures)

[Pisces69]

Why are there so many cheap townhomes in Eagan? LIke 30k to 60k? Also I heard Eagan has become really ghetto? Is that true?

[roselily]

My guess is folks took a killing when the housing market crashed and they just want to get out.

[1stpontiac]

I see about 12 or so townhomes in that range, clustered mostly in 4 complexes, and most are listed as foreclosures. It looks a little like a bank or a developer might have gone cleaning their books, but that's just a guess.

[bbr1973]

A friend of mine lives in one of the townhome complexes (Cedar Bluff) that has several of those ultra-cheap townhomes currently listed for sale. They're all foreclosures, and it's the sole reason nobody can get a reasonable price for their own unit. Most people paid upwards of $100k and are lucky to get $50-60k now.

In an attempt to both chase out existing troublesome tenants and discourage adding more of them, the homeowners' association removed the option to convert units into rental housing for everyone who purchased after a certain date (2005-2006?). Only people who have owned there for quite a while still have that alternative (due to grandfathering). This is another reason people are trapped in these nice, but small/starter townhomes. Many can't sell, and they can't rent them out.

[1stpontiac]

Ah, my old townhomes assoc wanted to do that, but I resisted taking it further because I wasn't sure of the legality, or if it was fair to owners.

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[golfgal]

I just pulled up listings for Eagan in that price range and all but 2 of those are condos, not townhomes. Most are under 1000 sq feet and have 1-2 bedrooms.

[QuietBlue]

Originally Posted by bbr1973

In an attempt to both chase out existing troublesome tenants and discourage adding more of them, the homeowners' association removed the option to convert units into rental housing for everyone who purchased after a certain date (2005-2006?). Only people who have owned there for quite a while still have that alternative (due to grandfathering). This is another reason people are trapped in these nice, but small/starter townhomes. Many can't sell, and they can't rent them out.

That's an awfully shortsighted HOA. Don't they realize that some of those homeowners will then decide they have no choice but to walk away, thus leading to more vacant units (not to mention lost dues), which will drive values down further, thus feeding the vicious cycle?

One of the reasons my HOA (I also own a townhome in Eagan) lifted our rental cap a couple of years ago was to avoid this very scenario. It's worked fine for us because landlords and renters are held to the same rules as everyone else, and there's requirements in place to keep out the problem renters (requiring proof of renter's insurance, background checks, etc). Allowing rentals by itself doesn't cause issues as long as it is properly managed.

[stolafs69]

Just another reason to never buy a condo or townhome. If you do, the value of it is dependent on whether a developer comes in and builds another brand new complex next to yours. All of a sudden your 5 year old townhome or condo is outdated and worth much less then you paid. I am generally not a big advacate for renting, but if faced with the choice, I would definetly rent over buying a townhome/condo unless you pick up a forclosued unit for cheap or something. Also (with the exceptions of ultra high-end places) townhomes/condo just attract the wrong type of people into the community. If Eagan keeps on building these things they will turn into the next Burnsville.

[1stpontiac]

Originally Posted by QuietBlue

That's an awfully shortsighted HOA. Don't they realize that some of those homeowners will then decide they have no choice but to walk away, thus leading to more vacant units (not to mention lost dues), which will drive values down further, thus feeding the vicious cycle?

One of the reasons my HOA (I also own a townhome in Eagan) lifted our rental cap a couple of years ago was to avoid this very scenario. It's worked fine for us because landlords and renters are held to the same rules as everyone else, and there's requirements in place to keep out the problem renters (requiring proof of renter's insurance, background checks, etc). Allowing rentals by itself doesn't cause issues as long as it is properly managed.

Its a tricky thing. Having resident owners is generally a good thing, as they are more invested in making sure the places look good and don't get run down. Appraisal values are affected by the number of rental units as well, so people worry about that.

Overall, though, I agree with you. I didn't feel that I had a right as a HOA unit-owner to tell someone who was moving out of town and needed to sell their house, "Not only can you not rent out your home, you can't sell your house to someone who want to rent it out. Having fun paying two mortages."

Originally Posted by stolafs69

Just another reason to never buy a condo or townhome. If you do, the value of it is dependent on whether a developer comes in and builds another brand new complex next to yours. All of a sudden your 5 year old townhome or condo is outdated and worth much less then you paid. I am generally not a big advacate for renting, but if faced with the choice, I would definetly rent over buying a townhome/condo unless you pick up a forclosued unit for cheap or something. Also (with the exceptions of ultra high-end places) townhomes/condo just attract the wrong type of people into the community. If Eagan keeps on building these things they will turn into the next Burnsville.

The part in red I think is an interesting point that I haven't thought of before. On the other hand, I'm don't think that your 5 year old townhome is automatically worth less because something newer came in. Chances are, the brand new place will be more expensive. Depending on many other factors, it might even increase the value of your property.

I think the part in blue is way too much of a generalization. My old set of townhomes was full of grad and medical students, young families who weren't quite ready for a stand-alone house, and older folks who didn't want to deal with their own yard-care and maintenance anymore. There are of course sets of townhomes and condos that are less than desirable, but there are neighborhoods of single-family homes that suffer the same problems.

[QuietBlue]

Originally Posted by 1stpontiac

Its a tricky thing. Having resident owners is generally a good thing, as they are more invested in making sure the places look good and don't get run down. Appraisal values are affected by the number of rental units as well, so people worry about that.

Overall, though, I agree with you. I didn't feel that I had a right as a HOA unit-owner to tell someone who was moving out of town and needed to sell their house, "Not only can you not rent out your home, you can't sell your house to someone who want to rent it out. Having fun paying two mortages."

The part in red I think is an interesting point that I haven't thought of before. On the other hand, I'm don't think that your 5 year old townhome is automatically worth less because something newer came in. Chances are, the brand new place will be more expensive. Depending on many other factors, it might even increase the value of your property.

I think the part in blue is way too much of a generalization. My old set of townhomes was full of grad and medical students, young families who weren't quite ready for a stand-alone house, and older folks who didn't want to deal with their own yard-care and maintenance anymore. There are of course sets of townhomes and condos that are less than desirable, but there are neighborhoods of single-family homes that suffer the same problems.

I agree about resident owners and appraisal values, plus IIRC there can be financing issues as well for things like FHA loans when the rental percentage gets too high. It's a hard thing to balance; rules and policies written for a different time don't always work so well in the current climate.

I also think it's a given that townhouses/condos can have their value impacted by what is built near them, but that's the same for any housing.

And yes, it's a silly generalization. My townhouse community isn't high end at all, yet we don't have any issues due to good management and rule enforcement. Further, it's almost all single people and couples without kids.