Condo business stable

Even with tighter lending guidelines, buyers are out there looking for deals Sunday, May 03, 2009 By KATHY JUMPER Real Estate Editor

Two weeks after broker Tammy Godbold listed 10 condominium units in Crystal Shores West in Gulf Shores, four were under contract, and she also sold two units in the nearby Crystal Tower, off the beach.

"This is a sign that people are ready, willing and able to buy," said Godbold, owner of Waterways Realty in Orange Beach. The two-bedroom, two-bath units in the 170-unit Crystal Tower were listed for $225,000 to $250,000; the three-bedroom, three-bath units in the 108-unit Crystal Shores West on the beach were listed for $382,250.

Buyers are coming back to the resort market, looking for deals, plunking down cash or financing condo purchases, according to Realtors.

"Condos are hot right now when the price is right," said Patrick Daily, owner of REMAX of Orange Beach. "If you find a two-bedroom, two-bath between $250,000 and $325,000 in a good building, it goes under contract immediately. The mortgage rates are awesome if you've got a little cash."

The mortgage lending crisis has lenders tightening guidelines on condo loans, but financing is available for qualified buyers, lenders and agents say.

Fannie Mae and Freddie Mac require that about 51 percent of the condo building be owner-occupied. The theory is that investors would more likely let a unit go into foreclosure than a second-home owner, according to lenders.

Many of the newer condo developments have rent restrictions, such as a 30-day rental minimum, and that helps avoid rental issues when financing a unit, according to Amanda Landry of Amicus Mortgage Group in Gulf Shores.

Buyers often prefer Fannie Mae since the institutional lender typically offers the lowest interest rates, according to Landry, but "you have to do your homework" when applying because lending guidelines are constantly changing, she said.

Interest rates on a 30-year fixed mortgage averaged 4.78 percent this past week, according to Freddie Mac. A 15-year fixed loan was 4.48 percent.

Restrictions are a way for lenders to "slow things down and try to recoup" in a tough economy, according to Anthony Kaiser, sales division vice president at Meyer Real Estate in Gulf Shores. One of the toughest things to get around, he said, is the 20 percent down payment that many lenders require.

Meyer's agents have had very few loans turned down, he said. A third of the recent sales have been foreclosure properties, with condos sell ing at an average $300,000.

Joey Parker of HMC, Home Mortgage Co., in Gulf Shores, sends a 25-point questionnaire to condo owners associations to help determine if a borrower is eligible for Fannie Mae or Freddie Mac lending.

"We do not have any problems," lending to condo buyers, Parker said. "You can still get very attractive financing terms. All the condos I do are on a 30-year fixed rate, and all have very attractive rates."

His business is up, with most of the activity in condos, Parker said.

"The market is absorbing short sales and foreclosure properties more than it did last year. And a lot of the units that developers kept back are selling."

The Merrill Co. decided to release most of the remaining developer-owned units in Crystal Shores West and Crystal Tower while there are buyers out there, according to Collier Merrill of the Pensacola-based company.

"People ask me if now is the right time to buy," Merrill said. "If you're investing and looking to flip it, I don't know. But if you're looking for something you want to use, now is the perfect time. You've got a lot of choices, you can use it and in 10 years it will be worth more than you paid for it."

Realtors are starting to see signs of the beach market reaching a bottom, according to Bob Shallow, owner of REMAX Paradise in Orange Beach. He said he's seeing second home buyers who can afford to spend $500,000 to $1 million on a unit that they don't have to rent.

Newer condo units are at 40 to 50 percent of the value they were a year or two ago, Shallow said. For example, a unit with a boat slip in Vista Bella on Ole River in Orange Beach is priced at $550,000 compared to the selling price of $1.1 million two years ago.

"People who want to sell and are realistic with the price, they now have an opportunity to sell it," Shallow said. "Two years ago, price didn't do it."