With single family home prices continuing to rise, many homeowners are electing to downsize by purchasing more affordable condominium units. Additionally, a condominium is now becoming the only affordable option for many first time homebuyers.
While the White House continues to preach that it wants to make more loans available to the average American, the strict restrictions on lending to condominium buyers continue to stand. The Federal Housing Administration (FHA) currently has restrictions in place which require a condominium project to become ‘certified’ prior to lending funds to purchasers. The requirements are so stringent that it currently lends to less than 7% of condominium projects in this country. While the certification process is aimed at ensuring the stability and financial solvency of a complex, the abysmally low number of approved projects suggests that the requirements need to be relaxed. With the limited supply of available condominium units for sale at any given time due to the housing boom, first time or low income prospective purchasers are now effectively precluded from purchasing a condo.
The FHA apparently has heard enough complaints to start drafting a proposal set to be introduced in 2015 which will allegedly permit more individuals to obtain FHA financing. Hopefully, spot loan approvals return and the requirements on project certifications are substantially relaxed to permit middle-income earners to become condo owners.