Condo sales get a boost
Changes in how the Federal Housing Authority views loans on condominiums may provide a boost to local real estate. Our condo sales this year have been strong, outpacing 2014 by 37 percent but it has been challenging for buyers to get financing. The rule changes early this month though will remove some of the roadblocks faced by would-be buyers and should bolster the selling prices somewhat.
The recession hit some condominium projects hard. As owners struggled to pay mortgages many turned to renters as a source to keep their loans current. Sub-sequently many of these projects soon exceeded the ratio set by the FHA and so were denied loan underwriting. For condo buyers to get an FHA loan on a condo, the entire condominium development had to qualify under strict rules. These rules had to do with the number of units that were owner-occupied, the type of insurance the condo Home Owner’s Association carried and the number of condos in foreclosure. Many developments were unable to meet FHA approval so anyone trying to sell a condo in an unapproved project was prevented from selling to a huge portion of potential buyers. That has all changed now. The certification process required of the HOA is less intimidating and is easier to qualify under.
The FHA loosened the definition of owner-occupied units to include second homes that are not investor-owned. In North Idaho that’s a big deal because many condo owners are snowbirds who flock to southern climates during the winter. The change means more buildings qualify for the required ratio of owner-occupied units.
The changes also streamlined the condo recertification process to include less paperwork. Buildings will only have to submit paperwork on “substantive changes” since the project’s last approval rather than documents for the entire approval. That not only reduces the hassles of assembling all that paperwork but could mean more buildings become certified because it’s simpler for, say, a new homeowners association president unfamiliar with the process who might just let certification lapse.
Under the new policies, the FHA can approve loan applications for condos in projects that have as much as half of their space devoted to commercial use, up from 25 percent before the change. That’s an especially important shift for mixed-use projects like Riverstone in Coeur d’Alene which devote ground-floor space to stores and restaurants and upper floors to residences.
The new provisions will expire in a year, giving the FHA time to implement a more comprehensive condo rule change. For now at least it will be a better market for sellers who had to rely on cash buyers prior to the changes.
Trust an expert….call a Realtor. Call your REALTOR or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a REALTOR member who will represent your best interests.
Kim Cooper is a real estate Broker and the spokesman for the Coeur d’Alene Association of REALTORS. Kim and the Association invite your feedback and input for this column. You may contact them by writing to the Coeur d’Alene Association of REALTORS, 409 W. Neider, Coeur d’Alene, ID 83815 or by calling (208) 667-0664