Over the last few years I’ve encountered more and more condominium projects that have lost their FHA project approval and have written on the issue before. What does it mean when a project loses approval? Buyers in those developments will not be able to secure FHA financing for their purchase. In 2011, approximately 9% of all condo sales were financed by the buyers using FHA financing.
9% seems small, right? Well yes it is relatively small, but since there are currently 6.5 months of supply of condos (still a buyer’s market and much higher than townhomes and single family) anything that reduces the buyer pool can impact the salability of the units in that development, leading to potential price declines or even perhaps more foreclosures if sellers cannot unload their homes and cannot afford to stay.
Considering so many developments have lost their approval, associations that can maintain or reinstate their FHA project approval will find themselves attracting more buyers to their development than one that does not have FHA financing. More buyers mean more sales, and potentially higher prices as well.
Not sure if a development has approval? Here is FHA’s project approval list.
