The Federal Housing Administration’s support for the condominium market continues to fall, but agency officials are hoping to reverse that trend.
During the first half of fiscal year 2012 (which ended March 31), FHA endorsed 19,600 condo loans, down 38% from the same period in FY 2011.
Agency officials recently met with industry and housing groups to discuss ways FHA could change its condominium requirements to safely provide more financing for affordable condo units. “We know condominiums are often a first option for first-time homebuyers,” FHA commissioner Carol Galante said at a National Association of Realtors meeting in Washington this week.
“We are making some changes to our condo policies very, very soon,” she said.
One Realtor asked if FHA would allow more rental units in a building where FHA condo financing is permitted. The commissioner indicated it might be difficult to lower FHA’s minimum owner-occupancy requirements. “FHA has to balance our risk of losses with providing access to credit,” Galante said.
The agency clamped down on condo lending in 2009. The impact was recognizable in FY 2011when originations of FHA-insured condo loans fell to 54,700, down over 40% from FY 2010.
NAR recently reported that condo/co-op sales in March came in at a 510,000 seasonally adjusted annual rate in March, unchanged from a year ago. However, the median sales price of a condo/co-op unit in March was $165,200, up 7% from a year ago.
