You have to give the government agencies credit they are doing everything they can to make it easier for people to buy homes, thus stimulating potential growth in the real estate market a bit longer.
Gov’t Squeezing Every Ounce from the Real Estate Market
The latest change comes from the Federal Housing Authority (FHA) and will be a positive impact to areas that have a substantial condo community presence.
My local market is certainly condo heavy so it will be interesting to see the impacts as year over year numbers have already shown negative results in the past month.
New FHA Condo Loan Approval Guidelines
In reaction to the 2008 market crash the FHA had put in new rules in 2009 that drastically reduced the amount of condo developments that qualified for FHA financing.
These new rules loosen the reigns on that making it easier for already certified communities to remain eligible as well as lightening the requirements on the percentage of owner occupants that must reside in the community.
Rather than having to re-certify every two years it will now be three and condo communities will only have to supply any new information as opposed to resubmitting all certification info.
Owner Occupancy Percentage
In the past communities needed more than 50% of owner occupants – the new rule will change that to as low as 35%.
This one is a particular game-changer in my opinion as I know of many communities in my area that will go from not qualified to qualified due to this. Heck, I even own a rental in a community that will be able to qualify if 35% is all that will be needed.
Squeeze that Lemon
The result of this change, especially for condo heavy markets is huge because now a ton of buyers that previously could not buy will be eligible to purchase in these communities.
As we know, supply and demand is the main determinant of a market. This will open up a bunch of demand that was previously locked up for condos.
I fully expect to see the value of my investment condo go up due to this change.
P.S. – Condos mean Homeowners Associations (HOA)
If you need to learn the pros and cons along with the ins and out of owning property within a homeowners association it’s covered in ScaredyCatGuide to Investing in Rental Properties.