The condo market can be one fickle little creature. Some years, condos are hot. Everybody wants one. Then, it goes cold and nobody will even look at them. But, over the last few years, something else has been happening to the condo market. Something kind of scary.
Condo complexes or neighborhoods are subject to a lot of scrutiny when it comes to financing. For someone to obtain an FHA mortgage on a condo, the complex must appear on the "HUD list" which is something the HOA has to apply for and maintain. This has proven to be problematic in recent years because many HOAs either don't know they are supposed to be doing this, or they do know that their neighborhood no longer qualifies. And since the majority of people are getting FHA financing these days, this presents a problem
But what about buyers using conventional loan products? Well, we run into the same problem. Even the conventional lenders want to follow the same guidelines. So, if the complex has too high a ratio of owner occupants to renters, no dice. If the complex has too little money in their reserves, or if their insurance is less than $1M, sorry Charlie. So, as you see, it was becoming an environment that if you owned a condo, you couldn't sell it because no one could buy it. And what happens then if someone can no longer afford their condo...foreclosures go up. The situation was looking pretty dire.
Well, today I was talking to one of my lender friends. He and I had previously had this gloom and doom conversation about the condo situation. He shared my concerns. Well, now, he's found a loan program that will allow a buyer, who intends to be an owner occupant, to purchase a condo regardless of the owner/renter ratio. This is huge, because that's usually the part of the equation that hangs everyone up. This is really good news for condo owners and purchasers. And, just in the nick of time. I'm meeting with a client tomorrow who I sold a condo several years ago. He's ready to move on to something bigger, so this is really good news.
Anyone in the market for a cool condo near the Zoo?
Condo complexes or neighborhoods are subject to a lot of scrutiny when it comes to financing. For someone to obtain an FHA mortgage on a condo, the complex must appear on the "HUD list" which is something the HOA has to apply for and maintain. This has proven to be problematic in recent years because many HOAs either don't know they are supposed to be doing this, or they do know that their neighborhood no longer qualifies. And since the majority of people are getting FHA financing these days, this presents a problem
But what about buyers using conventional loan products? Well, we run into the same problem. Even the conventional lenders want to follow the same guidelines. So, if the complex has too high a ratio of owner occupants to renters, no dice. If the complex has too little money in their reserves, or if their insurance is less than $1M, sorry Charlie. So, as you see, it was becoming an environment that if you owned a condo, you couldn't sell it because no one could buy it. And what happens then if someone can no longer afford their condo...foreclosures go up. The situation was looking pretty dire.
Well, today I was talking to one of my lender friends. He and I had previously had this gloom and doom conversation about the condo situation. He shared my concerns. Well, now, he's found a loan program that will allow a buyer, who intends to be an owner occupant, to purchase a condo regardless of the owner/renter ratio. This is huge, because that's usually the part of the equation that hangs everyone up. This is really good news for condo owners and purchasers. And, just in the nick of time. I'm meeting with a client tomorrow who I sold a condo several years ago. He's ready to move on to something bigger, so this is really good news.
Anyone in the market for a cool condo near the Zoo?
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