According to an article written by Chris Kissell from Bankrate.com in the reviewjournal.com (newspaper) on May 2, 2009 Fannie Mae stopped guaranteeing loans for new or newly converted condo developments if less than 70 percent of units have been sold. This is quite a change from their previous rules where the cutoff was 51 percent
I personally have seen that existing communities are not immune to these problems either. Fannie Mae guidelines seem to be putting a crimp on resale condos too.
I was showing property this week in a complex that was built in approximately 1996 The listing agent made it clear that cash buyers only need apply. I sold some units in this project when it was new, prices were higher & FHA gave the A OK for this community.
In a condo community if 15% or more owners are delinquent on their HOA dues then Fannie Mae will not guarantee a new loan either.
In July Freddie Mac will be following Fannie Mae's rules.
To see Mr. Kissell's article go to http://www.lvrj.com/real_estate/44222017.html
So, now we have all these condos for sale at amazingly low prices but are there going to be enough cash buyers out there to bring these communities back into balance?
Well, I just wrote an offer for a Buyer on a condo that is listed at $49,900 which is about 1/3 to 1/2 less the value when it was new. They are only taking cash offers. At this time they have 40 offers. It doesn't seem like there is any problem here except for the forty people competing for the same place. Of course the low price and the excellent condition of this unit is bringing people out of the woodwork. Unfortunately Buyers requiring loans to purchase are eliminated. It begs the question, that if loans were still available for these places would prices have dropped so much?
What do you think?
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