The good news: More than 43,200 condominium apartments have been sold in South Florida's coastal markets since the real estate boom began in earnest in 2003. The bad news: Most of the buyers are not primary users.
While that's not bad news per se, it means that most of the units are occupied by renters – if they are occupied at all. And that makes it extremely difficult, if not downright impossible, for people who want to buy into those properties to secure financing.
According to the latest report from CondoVultures, a Bal Harbour-based consulting firm, less than one of every eight condominium properties in the region's seven largest coastal markets have adequate verifiable home ownership statistics to warrant lending approvals from Fannie Mae and Freddie Mac.
CondoVultures principal Peter Zalewski admits that determining the ratio of renters versus primary users – a key criterion for conventional financing – in a condo project is a challenge because no formal paperwork is required to be filed with an independent third party or government agency.
But an examination of Florida Homestead Exemption declarations filed by the primary users of nearly 125,000 condo units in 2011 found that less than 175 condo projects out of a pool of 937 east of Interstate 95 have a high enough verifiable concentration of owner-occupied units to meet a key financing requirement set by purchasers of mortgages on the secondary market.
Based on that evaluation, Zalewski and company believe that only 13% of the more than 43,200 South Florida coastal condo units built and sold over the last eight years are owned by primary users. And that percentage could drop even lower because sellers of the 5,400 unsold developer units are openly courting investors and second-home buyers.
CondoVultures estimates that more condos in the Boca Raton-Deerfield Beach area are owned by primary users than in any of the seven markets.
About 41% are primary users in the Boca-Deerfield region. The Ft. Lauderdale is a distant second with 33% primary users. But the 60-block stretch known as Greater Downtown Miami area, primary users own fewer than 20% of the apartments.
