Condo Sellers Face Challenges Nationally

We all know the current real estate climate is tough for homeowners, but it can be just as difficult- or moreso- for those who own a condo. The Wall Street Journal shed some light on the fact that condo prices have fallen even faster than single-family homes in some places. Everything from regional over-building to a higher number of speculators & entry-level buyers purchasing them has doomed the once blossoming condo market. There are even more condos than single-family homes underwater.

One big issues is that the new FHA rules don’t count condo projects as qualifying for financing by some GSE-backed mortgages, often because too many of the units have been rented by the developers or because of pending or active litigation. The WSJ profiles owners in neighborhoods around Boston, and quotes Randy Wilburn, an agent there, as saying it’s a “…major, major issue. Many condo owners have seen the floor fall out from under them.” Wilburn tells the story of a client who paid $240,000 for a three-bedroom that is currently getting no calls while listed at $125,000. One interested buyer offered $70,000 but the bank wouldn’t agree to the short sale. So what happens to condo owners who have lost their shirt, or even a whole closet full of shirts, who can’t find a buyer and can’t get a bank to agree to a short sale?

With condo prices falling nationwide at a reported 24.8% and consistently slow sales volume, that’s a question a lot of people are asking. After peaking at $227,000 nationwide, the condo median sale price across the country is hovering around $175,000, with many eyes anxiously awaiting the new numbers on November 11.

So why not get a mortgage outside the FHA? Well, many other lenders are circling their wagons and digging in their heels, so the FHA is getting a bigger market share. That means that their rules have an even wider impact. Luckily in New York (like Miami or San Francisco), foreign money is leading the condo price rebound charge.

If you are one of those stuck with a condo you can’t sell, the WSJ recommends renting it to vacationers as a way to make even more income than spending your time looking for a long-term renter. If you want or need to sell, though, it’s really a time to consider any and all offers, even short sales, and make sure that you are using every possible publicity avenue at your disposal.

Photo Credit: JoeInSouthernCA

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