The San Diego condo market experienced a significant decline before the mortgage credit crunch started. In fact, San Diego was one of the markets that promulgated the credit crunch with its higher than normal foreclosure rate. On August 2, 2007, American Home Mortgage went belly-up, sparking a chain reaction of A paper lenders to close their doors, permanently. 262 lending institutions have "imploded" since the sub-prime mortgage decline in late 2006. The mortgage industry contraction has exacerbated the San Diego housing market decline, especially the condominium market.
It doesn't have to stay like this.
Condominium management associations are dealing with stressed out homeowner associations who are responding to angry homeowners.
"Where are all the qualified buyers?", they demand. "Why is the San Diego condominium maket in a free fall?"
I have the answer. Nobody can get financed. Well, nobody is a strong word; very few can get financing for San Diego condominiums. On June 2, 2008, Fannie Mae severely limited its approvals for condominium financing. Now, you need at least 10% downpayment to get a loan for a condominium....UNLESS...
...you read carefully. I know how to stop these prices from dropping like a ball off a table;
government financing.
That's right, FHA or VA loans can save the San Diego condo market. They don't have "declining market" adjustments, aren't relying on PMI companies to insure loans with a downpayment of less than 20%, and offer competitive loan terms to borrowers.
The problem for FHA/VA home loans in Southern California? Most condominium complexes are NOT approved for government loans. If you're a condo owner, or a HOA board member, or an association management company employee, you can check to see if the complex is approved for:
FHA financing here or
VA financing here.
If your complex isn't approved for government loan financing, you have effectively cut the pool of potential buyers by two thirds. Many San Diego condominium buyers are first-time home buyers and don't have 20% down payment. When you limit the pool of potential buyers, you work against the already stabilizing housing market in Southern California.
While houses may rise, later this year, San Diego condominiums can still decline in value because of poor management. Can you afford to have your property investment go sour because of laziness or lack of information? It doesn't have to be that way.
Call me and I'll help assist you with the government loan approval process. It may take 4-6 weeks and will probably cost the association about $2,000 to get the complex approved. While that may sound costly, I assure you that your homeowners will be ecstatic that you've stabilized their property value.
Brian Brady is a San Diego-based mortgage banker and can be reached at 858-777-9751.
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This article should be syndicated on the front page of every major newspaper in the country.
The first thing I do when I get an inquiry about a condo is check to see if it is FHA/VA approved. Some in the area are not approved simply because they didn't bother. Some because they don't have sufficient number of closed units. Some because the amenities are not completed. I ran across one last week that said they were turned down because the HOA had only been turned over to the owners for 7 months and it had to be a full year. (THAT WAS A NEW ONE ON ME).
Indeed, condo associations need to get their communities approved for FHA/VA. It will redound to their benefit in easier sales/transfers and higher market value.
Condo owners, even if they purchased with conventional financing, should be all over their condo association to get this job done.