Condos not so hot? Neither is bad data!

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Recently Travis Pittman of King 5 news shared his personal story about how he is unable to sell his condo in Kent. He sites part of the reason that he is unable to sell the condo is because of FHA requirements. I do agree, it’s important to keep your condo on FHA’s approved list, however the data that was provided in the article is not entirely correct.

“This condo is part of a homeowners association. In order for the HOA to stay FHA-approved, no more than 20% of the units may be rented out. We’re third on the waiting list to be approved to rent, but the property manager says the people who are renting now have done so for several years and there’s no sign of that changing.”

In order for a condo to be eligible for FHA financing, the following must be true:

  • At least 50% of the units must be owner occupied; and
  • No more than 10% of the units may be owned by one entity. If there are less than 10 units, then only one entity can own a unit.

Mr. Pittman, I suggest you contact your condo home owners association and ask they if the 20% cap is based on a restriction the HOA is imposing or if perhaps THEY have wrong data too?

Ben Kakimoto, Real Estate Broker with Keller Williams and author of the blog Seattle Condos and Lofts noticed another discrepancy with the article where Pittman discusses median sales prices for condos:

“One thing I that caught my eye was his stats, particularly the part about King County MSP up only 0.07% YOY. That’s inaccurate. It’s 7.8%, not 0.07%. And, that’s only for a 31-day March vs March period. Seattle city MSP is up 15.1% YOY for March.  

The NWMLS changed the way they display % in the monthly breakout spreadsheet, so it looks like its only 0.078%, but it’s actually 7.8% ($269,600 March 2015 vs $250,000 March 2014).

Real estate is all about location, location, location…and a condo in Kent is not as hot as a condo in Seattle or house in Bellevue…a condo in Kent may not be as house in Kent. Condos historically tend to be the first to depreciate and the last to appreciate in the house market.

Kary Krismer, a Real Estate Broker at John L. Scott in Renton says:

It’s not just condos–there are a lot of places and types of houses that have not recovered fully. Condos face some additional risks, however, like significant dues increases which hurt the value going forward. That didn’t seem to happen on this complex, but I’ve seen it happen elsewhere.

The bottom line is that it’s that it’s irresponsible to publish inaccurate data – especially from a trusted source like King 5 news. Ironically, it was a slightly inaccurate report from King 5 about Loan Officer licensing that caused me to start blogging in 2006. It was reported that all Loan Officers are required to be licensed under the SAFE Act, when LO’s who work for banks and credit unions are only required to be registered.

If you’re considering selling a condo, please contact a local Real Estate Broker who is familiar with your area. I’m happy to offer suggestions to local professionals, if needed. And if you are considering buying a condo, townhome or detached home anywhere in Washington state, of course I’m happy to help you with your mortgage needs.

 

Comments

  1. We have a condo paid for, we lease a home in the desert to get away for weeks at a time, during this time my mother move in with us she would go to the desert with us and stay a couple weeks. couple years went by she became ill, years later caring for her she passes away, Now we are in debt arrangements took all we had, Now we want to get a loan on the condo, we now have to prove we live in the condo because we still have the lease in the desert how do we prove this is also are residence, we had started to upgrade the condo could not complete due to Moms illiness, funds were running out. were in debt need help Our condo in paid off, can you suggest something,

    • Amber, I’m so sorry about your Mother. Underwriters are probably going to look at where you live most of the time – where are you employed? Have you leased the condo out recently? I suggest that you have your loan officer run your scenario by an underwriter in advance to their approval. Good luck!

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