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REALTORS’® outlook for the next six months for townhomes and condominiums was generally “weak” across most states, except in the District of Columbia, North Dakota, Colorado, Texas, California, Florida, Hawaii, and Alaska (red), according to the December 2014 REALTORS® Confidence Index Survey. These states have experienced strong job growth due to the oil/gas and information technology sectors. However, REALTORS® in the states that are heavily reliant on oil and gas such as Texas and North Dakota have started to caution about the effect of falling oil prices in their states.
REALTORS® continued to report that obtaining FHA unit financing for condominiums is difficult because many condominiums do not meet FHA eligibility criteria.[1] Condominiums are frequently the entry point to homeownership for first-time homebuyers, more so with the growing interest for “walkable” and “smart” neighborhoods.
What Does This Mean For REALTORS®? Helping buyers find starter homes may be an increasing challenge given FHA requirements and increasing demand. REALTORS® will need to work more patiently with homebuyers and present a wider set of feasible alternatives.
[1] Condominium projects need to pass eligibility criteria to be FHA-approved that will enable borrowers to avail of an FHA mortgage. Among others, criteria relate to the area devoted for non-residential use (no more than 25 percent),ownership (no more than 10 percent ownership by a single entity), delinquency dues ( no more than 15 percent), use of facility (assisted living facility are generally not eligible), and rental pooling arrangements (not eligible). See http://portal.hud.gov/hudportal/documents/huddoc?id=11-22mlguide.pdf
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