Wall Street Journal: Condo Market Unravels
From the 5/7/09 Wall Street Journal:
Gazette: "Condo Clampdown - Tougher mortgage rules hamper condominium market" (3/14/09)
Builders and bankers in Hampshire County fear that stricter lending rules rolled out this year by Fannie Mae, the government-sponsored mortgage giant, will further erode the sagging condo market locally...
Private mortgage insurance companies are requiring banks to accept no less than 20 percent down for mortgages involving condominiums because of declining values for this type of housing and financial losses...
The tougher down-payment standards do not apply to single-family homes...
Fannie Mae's condo loan requirements affect both established and condo projects in the pipeline. Among the changes:
Condominium sales fell nearly 25 percent [in Hampshire County] in 2008 compared to the previous year, exceeding the state average of 23 percent, according to figures provided by The Warren Group, publisher of real estate data for New England. Condo sales fell by more than 33 percent in Hampshire County from two years ago.
Sidebar: "Condo listings, time on market double during past four years"
The number of condominiums for sale and the number of days they sit on the market before selling, doubled in the Pioneer Valley between 2005 and 2008, according to a statewide housing study produced by the Donahue Institute at the University of Massachusetts.
The number of condo listings increased from 313 to 595, while the average number of days on the market went from 101 to 205, according to the study.
Boston Globe: "Double-digit drops in home sales, prices" (4/30/09)
Condo sales in the first quarter dropped nearly 27 percent.
Springfield Republican: "Local home sales rise, but state figures drop" (4/30/09)
In Hampshire County, March sales decreased by 30.36 percent over the past year and prices decreased by 10.16 percent.
USA Today: "Why home values may take decades to recover" (12/15/08)
...So far, home values nationally have tumbled an average of 19% from their peak. As bad as that is, prices would need to fall as least 17% more to reach their traditional relationship to household income, according to a USA TODAY analysis of home prices since 1950...
New York Times: Downsides of Owning a Condo in a Downturn (5/15/08)
When people buy condos, they expect their monthly fees will cover many of the responsibilities that they would otherwise have as owners of single-family homes, like cutting the grass and paying the water bills. Now many find themselves nagging each other in the hallways to pay their assessments and adding special fees while haggling over chores...
"...your fate is tied to 50 or 100 other people who may stop making their condo payments," [says Sam Chandan, chief economist at the real estate research firm Reis]...
Buildings with few units can suffer even if it just one owner falls into trouble...
[Condo owner Mark Mills] resents neighbors who have rented units they cannot sell to 20-somethings, who leave beer bottles in the lobby and hold late-night parties...
Woes in Condo Market Build As New Supply Floods Cities: Wall Street Journal (3/22/08)
The condominium market is about to get worse as many cities brace for a flood of new supply this year -- the result of construction started at the height of the housing boom...
The deluge means bad news for developers and potentially lower prices...
The deteriorating economy isn't helping. "When the world goes to hell in a handbasket, the last thing anyone wants to buy is a condo," says Cathy Schlegel, a mortgage-loan broker in Fort Worth, Texas...
Swig Takes Hit as Condo Market UnravelsSee also:
...Mr. Swig's battles are a sample of what is happening nationwide in the condo-development sector as thousands of new units keep being delivered into a market in which demand has evaporated...
Many condo projects throughout the country are going bust as developers default on construction loans. The losses are among the causes of the commercial real-estate woes that are dragging down banks and other lenders. Delinquencies on condo construction loans jumped to 32% in the first quarter, up from 25% in the previous quarter, while defaults on nonresidential construction loans rose to 8.9% in the first quarter, from 6.6% in the previous period, according to Foresight Analytics LLC...
Gazette: "Condo Clampdown - Tougher mortgage rules hamper condominium market" (3/14/09)
Builders and bankers in Hampshire County fear that stricter lending rules rolled out this year by Fannie Mae, the government-sponsored mortgage giant, will further erode the sagging condo market locally...
Private mortgage insurance companies are requiring banks to accept no less than 20 percent down for mortgages involving condominiums because of declining values for this type of housing and financial losses...
The tougher down-payment standards do not apply to single-family homes...
Fannie Mae's condo loan requirements affect both established and condo projects in the pipeline. Among the changes:
- At least 70 percent of the housing units in a new condo project, including condo conversions, must be sold or under contract before Fannie Mae backs a mortgage;
- No more than 15 percent of the condominium or homeowner association dues can be more than 30 days past due;
- Added insurance requirements, including hazard, liability and fidelity insurances, are now required for Fannie Mae-backed condo loans;
- Other than the developer, no single entity can own more than 10 percent of the total units in a new condo project.
Condominium sales fell nearly 25 percent [in Hampshire County] in 2008 compared to the previous year, exceeding the state average of 23 percent, according to figures provided by The Warren Group, publisher of real estate data for New England. Condo sales fell by more than 33 percent in Hampshire County from two years ago.
Sidebar: "Condo listings, time on market double during past four years"
The number of condominiums for sale and the number of days they sit on the market before selling, doubled in the Pioneer Valley between 2005 and 2008, according to a statewide housing study produced by the Donahue Institute at the University of Massachusetts.
The number of condo listings increased from 313 to 595, while the average number of days on the market went from 101 to 205, according to the study.
Boston Globe: "Double-digit drops in home sales, prices" (4/30/09)
Condo sales in the first quarter dropped nearly 27 percent.
Springfield Republican: "Local home sales rise, but state figures drop" (4/30/09)
In Hampshire County, March sales decreased by 30.36 percent over the past year and prices decreased by 10.16 percent.
USA Today: "Why home values may take decades to recover" (12/15/08)
...So far, home values nationally have tumbled an average of 19% from their peak. As bad as that is, prices would need to fall as least 17% more to reach their traditional relationship to household income, according to a USA TODAY analysis of home prices since 1950...
New York Times: Downsides of Owning a Condo in a Downturn (5/15/08)
When people buy condos, they expect their monthly fees will cover many of the responsibilities that they would otherwise have as owners of single-family homes, like cutting the grass and paying the water bills. Now many find themselves nagging each other in the hallways to pay their assessments and adding special fees while haggling over chores...
"...your fate is tied to 50 or 100 other people who may stop making their condo payments," [says Sam Chandan, chief economist at the real estate research firm Reis]...
Buildings with few units can suffer even if it just one owner falls into trouble...
[Condo owner Mark Mills] resents neighbors who have rented units they cannot sell to 20-somethings, who leave beer bottles in the lobby and hold late-night parties...
Woes in Condo Market Build As New Supply Floods Cities: Wall Street Journal (3/22/08)
The condominium market is about to get worse as many cities brace for a flood of new supply this year -- the result of construction started at the height of the housing boom...
The deluge means bad news for developers and potentially lower prices...
The deteriorating economy isn't helping. "When the world goes to hell in a handbasket, the last thing anyone wants to buy is a condo," says Cathy Schlegel, a mortgage-loan broker in Fort Worth, Texas...
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