Know about market updates

Cash may no longer be king for condos

ORLANDO, Fla. – Oct. 4, 2016 – Orlando condo owners and real estate agents are studying federal reforms they hope will boost what has become one of the nation’s slowest recovering condominium markets.
Restrictions on FHA mortgages for condo buyers are set to ease starting this month. Under one long-awaited law set to take effect Oct. 27, buyers will be able to get federally backed mortgages to purchase condos in buildings where two-thirds of residents are renters. In the past, at least half of residents had to own units to meet mortgage rules.
“It would boost our business big time,” said Thomas Allen, broker for Orlando-based Urbanista. “The definition of Florida condo is rental. It has been since the inception of condos in Florida. What this would do is drastically boost sales.”
Few regions have struggled more with their condo markets than Orlando. A decade after the housing market began its collapse, Metro Orlando’s midpoint prices for condos are $106,900 – still far below their 2006 peak of $182,700, according to data from Zillow. Only eight other condo markets in the U.S. have been slower to recover and four of those are in Florida: Polk, Highlands, Putnam and Alachua counties.
As cash investors swooped in to purchase Central Florida condos when their midpoint price was at a rock bottom $66,000 four years ago, condominium properties throughout the region became increasingly filled with renters.
Walking his two dogs down South Eola Drive along a stretch of upscale condominium buildings, 32-year-old Brandon Garceau said he and his wife spend about $22,000 a year on rent in the area. They understand that purchasing a condo would make financial sense – but at this point in their lives, he added, they would rather enjoy trips to New York City and Europe instead of bankrolling a mortgage and home repairs.
Greater options for mortgages could eventually sway the couple’s thinking, he said.
“Anything that makes it easier to buy a condo would help, when we are ready to buy,” Garceau said.
The timing of the reforms’ rollout has been complicated because the U.S. Department of Housing and Urban Development (HUD) has been working for years on new FHA guidelines that would give the agency greater flexibility. For instance, HUD is getting public input on a proposal that would allow mortgages on buildings with 25 percent to 75 percent renters.
“The range allows FHA to choose a specific percentage that is responsive to future market changes,” said a department spokesman.
Owen Beitsch, a principal with Orlando-based Real Estate Research Consultants, said the proposals are generally reasonable but buyers should still beware.
“As a practical matter, I think each buyer should be knowledgeable about the mix of owner and non-owner occupied units prior to executing a sales contract,” he said. The reality, he added, is that more affordable units are likely to be in buildings with a greater share of renters.
Overall, he added, restricting mortgages on condos more than houses “poses something of an inferential bias against renters, which may be at odds with housing needs and perhaps local planning goals.”
Another HUD proposal would allow spot approvals of mortgages to purchase specific condos in buildings that were not on the FHA’s approved lending list. Orlando condos that lack FHA approval include 101 Eola, The Sanctuary, The Vue and Solaire, according the HUD.
Some in the real estate industry say the changes might not go far enough. The reforms, for instance, would expand the length of time condominium associations can take to get reapproved to be on the FHA’s approved list. In the past, associations had two years and the new requirements gives them three years.
Orlando real estate agent Sharon Voss, past president of the Orlando Regional Realtor Association, said she was part of a national committee working on the issue and her group had pushed for two additional years so associations only had to undergo the re-approval process every five years.
The new measures could literally open doors for renters who would like to start building some equity, said Helene Brotman, a broker for Premiere Property Group.
“It would open this market for first-time buyers, especially at [renter-heavy] buildings like The Grande and Paramount,” said Brotman, who rents a condo on the edge of downtown.
But for her? She said she would be unlikely to buy because she gets too good a deal on her rental condo.
Copyright © 2016 The Orlando Sentinel (Orlando, Fla.), Mary Shanklin. Distributed by Tribune Content Agency, LLC.  
Source: Florida Realtors Feed

Leave a Reply

Your email address will not be published. Required fields are marked *