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NEW FHA LOAN GUIDELINES FOR CONDOMINIUMS BENEFIT BUYERS
Condominiums are an important part of the housing market for first time buyers. Too often buyers have the income and credit score needed to purchase a home but lack an adequate down payment which can make entering the housing market prohibitive.
In an effort to promote affordable and sustainable homeownership, especially among credit-worthy first time buyers, the Federal Housing Administration (FHA) has recently issued new guidelines making obtaining FHA financing for condominiums an easier and more streamline process. FHA has issued an update to its condo rules, effective October 15th, that will loosen requirements for financing condominiums. Here are some of the more important changes effective this month:
- Low Down Payments Still Available. Buyers can still purchase a house or condominium with as little as a 3.5% down payment
- FHA Certification and Recertification. FHA requires a condominium community to have obtained FHA certification. It is a detailed process and there is an expense to the HOA involved, but once complete, having FHA certification makes a community more desirable to buyers and FHA financing much easier. The FHA condo certification now lasts 3 years vs. two and the recertification process has been streamlined.
- Single Unit Approvals (spot loans) Permitted. In the past, if a condominium community wasn’t on the approved FHA list, it was difficult, at best, to obtain FHA financing. The new guidelines now make it easier for an individual unit to be approved for FHA “spot loan” financing in a community that isn’t FHA approved as long as no more than 10% of the units in the community are FHA insured. (A buyer must use a FHA approved lender.)
- Owner Occupancy Requirements Eased. FHA now requires that a condo community be just 50% owner occupied.
- Commercial/Non-Residential Space. The amount of permitted non-residential space (retail, commercial, parking) has been increased from 25% to 35%.
These updated FHA loan guidelines will now allow thousands more condominium units to qualify for FHA financing, opening homeownership opportunities to many buyers. Homeowner associations are encouraged to obtain and maintain FHA certification. Opening the window to homeownership will encourage more people to buy and occupy homes resulting in fewer investor owned units, higher owner/occupancy levels and stronger communities.
The Risk of Relying on Home Value Zestimates
Earlier this month the Seattle Times reported on a recent Zillow Zestimate for a home in Belfair on the Kitsap Peninsula. The Mason County assessor’s value of the home was $283,000. The home recently sold for $225,000 (below market value because the home was headed for foreclosure). A Zillow Zestimate published the home’s value at $1.8 million – 700% higher than the county assessor’s office, several real estate companies and just about any local Realtor® who knows and understands the local market. This is an example of how algorithms can go wrong.
flickr/Robert Couse-Baker
The Zillow real estate website is both loved and hated by buyers, sellers, appraisers and real estate professionals. This recent error in valuation is a classic example why Zillow’s Zestimates should be taken with a grain of salt. Zillow is a popular real estate data company that provides real estate data on millions of homes throughout the United States. Zestimates are created using algorithms, publicly available sales and market data. Zillow has no real estate brokers – no one from Zillow has ever visited the homes or neighborhoods for which their estimates of value are provided. Continue reading
Bellevue Condo Market Statistics
Earlier this month I shared 2017 King County real estate market statistics supplied by the NWMLS. Median sales prices were up 15% county-wide (houses and condos) over 2016. Taking a closer look, here are the 2017 market stats for Bellevue condos:
- 759 condos sold in 2017 (resale and new construction), up from 746 in 2016 for a 2% increase
- The median Bellevue condo sales price was $500,550 in 2017, up 30% over 2016.
Just eight weeks into the new year stats haven’t changed much. There are just 20 condos available for sale in Bellevue. Newly listed condos are trickling into the market and selling quickly. So far this year 61 resale condos (vs. new construction pre-sales) have sold with an average market time of 15 days. Sales prices are averaging 5.5% over the list price.
This year has already seen an all time record condo sale in Bellevue. A penthouse at Bellevue Towers sold earlier this month for $11,950,000. Custom designed throughout, the home offers 6,398 SF of luxury interior living space plus multiple terraces that add 10,000 SF of outdoor space with 360 degree views.
No doubt the penthouse sale will hold the city/county/state condo sales record for some time, but sales data for the balance of the market is a bit more realistic. Of the 61 resale condos sold since January 1st, sales prices ranged from $202,750 for a 691 SF one bedroom/one bath to $2,237,500 for a 2,615 SF 2 bedroom + den/2 bath penthouse. The median Bellevue condo sales price so far this year is $558,568, but of those 61 sales, 17 (20%) sold for $400,000 or less. Condo values in and around the central business district will continue to command higher prices per square foot, but step just outside the downtown core and prices are far more affordable while still offering easy access to downtown’s workplaces, nightlife and arts and Bellevue’s sought after schools.
Available condos are going to be in short supply for the foreseeable future. A limited number of communities are in design review or under construction, but delivery of those homes is 2+ years away. A few recently completed new communities, mostly multi-level townhomes, are adding new homes to the mix but supply is limited with prices starting in the $700,000s and up. The supply of condos this year is likely to be found in the dozens of existing communities just outside the central business district. They offer a sought after Bellevue address and access to great schools. New construction is very sexy, and the amenities luxurious, but older communities often offer larger floor plans, more green space and more affordable prices. Trading a few blocks of location may gain you a lot of space and lifestyle for less money. Those resale condos are going to be in short supply this year too. If you’re ready to sell, be ready to move quickly. If you’re ready to buy, be ready to act quickly and work with a Realtor® who knows and understands the market.
2017 Local Real Estate Market Data
The info-graphic above provides a quick look at 2017 King County real estate market statistics.
- nearly 3% more homes (condos and houses) sold in 2017 vs. 2016
- the median sales price was up nearly 15% county-wide
- at the end of 2017 there was less than a one month supply of available homes
- a 4 – 6 month supply is considered normal – we haven’t sen a “normal” level of supply for 2+ years
Six weeks into 2018 the stats haven’t changed much. Homes are coming on the market slowly and are selling quickly. Inventory still can’t meet buyer demand. The “spring” market generally opens up in mid-to-late February. Hopefully there will be more condos and houses available as the weather begins to warm.
The take away . . .
- Planning to sell? Buyer demand is high but condition and location are still important selling factors.
- Ready to buy? Position yourself to be a strong buyer. Meet with your lender and obtain a current loan pre-approval . Work with your Realtor® to educate yourself on neighborhoods, schools, recent sales prices and list vs. sold statistics, commute times, etc.
- Expand your options – maybe the home that fits your lifestyle isn’t a house. Don’t rule out a condo or townhouse which can offer a single family lifestyle with lower maintenance responsibility, a great alternative if you don’t want a lot of yard or exterior home maintenance.
2018 is expected to be another challenging real estate market for buyers and sellers. Be patient. Be flexible. Be ready to move quickly.
Robin is a Realtor® with Windermere Real Estate/East. She lives and works in Bellevue and specializes in the Eastside’s condo and townhome communities.
Where Are the Bellevue Condominiums?
An article in the Puget Sound Business Journal this week compared the available local condominium inventory to New York City. Granted, NYC is a much larger and more expensive market, but currently NYC has 388 condos for sale priced less than $500,00. At the time the article was written there were only five condos available for sale in Seattle priced under $500,000. Here on the greater Eastside there are less than 100 condos available for sale – not nearly enough to satisfy demand.
We are fortunate to live in a region where the economy is thriving, employers are hiring, housing is relatively affordable (compared to some other major metropolitan areas) and its a beautiful place to live with a temperate climate and year-round recreation options. Recent U.S. Census Bureau reports show that nearly 250 people move to the Seattle/Bellevue metropolitan area every week (for all the reasons just mentioned). Its also a great place to retire because of the mild climate, vibrant arts, entertainment and social scene and world class health care services, so people aren’t leaving in great numbers either. Because retirees stay in the area and because job opportunities bring hundreds of people a day to the area, it doesn’t appear there will be much change or relief to the tight inventory or escalating housing prices in the near future. Continue reading
How Smart is Your Home?
I was recently approached for an on-the-street survey conducted by a major local tech company regarding smart houses, asking if I would value "smart house" features for comfort, convenience, energy conservation and security.
The growth of "smart homes" has exploded worldwide. According to a recent article in Realtor® Magazine, approximately 100 million households will be "smart" by the end of the year and that number is expected to grow to 300 million in the next ten years. Obviously tech companies are banking on this trend, as the market for products regulating home automation, appliances, energy use, security and data analytics is growing. The big question is consumer need and acceptance . . .
- will a smart home factor in a buyer's decision to purchase one home over another
- with prices still relatively high and the technology still fairly complicated, will the average homeowner embrace the technology
- is this just a passing fad, or could the technology eventually take off (solar panels took years) and demonstrate a return-on-investment
Consumers are increasingly tech savvy and showing more interest in smart home technology. While these products are growing in popularity (thermostats, alarms, cameras, auto-locking doors, etc.) and can be easily controlled from a phone or tablet, how many buyers will be more likely to buy a home if smart products are installed? Is smart home technology an upgrade the average homeowner would consider instead of making cosmetic updates? It will be interesting to see how long it takes for smart home technology to be the new norm.
