Condos and The Current Market

I am seeing a good inventory of very nice condominiums in desirable locations. Many remodeled, move-in ready, 2 or 3 bedroom units can now be purchased for less than $100,000! If you are thinking about purchasing or selling a condominium in the current market, there are a some important things you will want to know.

First of all, financing for condominium purchases is becoming increasingly difficult. Since the Federal Housing Administration (FHA) is no longer doing “spot approvals” for FHA financing, the inventory for condo purchases that qualify for low down payment loans is scarce. The bulk of the inventory is for condo complexes that are not approved by the FHA or VA. The result is that a higher down payment will be required for financing. There are a few programs that provide 20% down mortgages for condos, but most investors are now asking for a minimum of 25% down. Even in the low price point of $100,000, this can be difficult for purchasers to come up with. After all, if a purchaser has that amount of money that they can apply to a down payment, most will opt for a single family detached home over a condominium, which in turn will typically appreciate quicker, and have a much better resale value.

To check to see if a condo complex is on the FHA approved list, go to:

https://entp.hud.gov/idapp/html/condlook.cfm

To check to see if a condo complex is on the VA approved list, go to:

http://condopudbuilder.vba.va.gov/2.2/frames.html

The second challenge is that investors have significantly tightened up the underwriting guidelines relative to condominiums. Most programs will require at least 60% of the units within any complex must be owner occupied. This may limit the appeal to investors who would otherwise be interested in purchasing condos for rental income properties. In addition to occupancy requirements, the complex cannot be involved in any sort of litigation, and at least 95% of all HOA dues must be current. There is a questionnaire that most Lenders will require to be completed by an officer of the condo association. If you would like to view a sample of the questionnaire, you can see it at:

www.TheOregonBroker.com/CondoQuestionnaire.pdf

It is important to know the market you are targeting when you are selling a condo, as well as the guidelines that will need to be followed if you are purchasing a condo. As always, I am here to help. If you, or anyone you know, are thinking about buying or selling a condo, please call or e-mail me. My goal is to make the complicated seem easy, without pressure, and keep you ahead of the market.

Best regards,

Mark Vandervest, Broker
RE/MAX Equity Group, Inc.
9790 SW Nimbus Avenue
Beaverton, OR 97008
503-495-4973 Office
503-319-5848 Cell

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