Beautiful, Sunny South Florida!

Warm sea breezes, palm trees and toes in the sand! Heaven on earth! Or so it seems when you're in 19 degree weather, shoveling snow off your driveway. I'm Debbie Bates, and I've been lucky enough to call Fort Lauderdale my home since I was 5 years old. A Realtor since 1998, I love helping people find their dream home. 

I've thought about starting a blog for years and am finally going to give it a whirl. Please check back for updates and feel free to comment! 

Aside from reading my posts, I hope you'll spend some time looking through the various city pages on my site. My website is updated every 5 minutes with the latest listings, so you won't find old, expired listings here. If you need help setting up a search, don't hesitate to reach out to me at 954-557-7036  or debbie@SouthFLHomes.com. I'd love to help you find Your Dream Home!

Oct. 17, 2019

New FHA Condo Rules

Exciting news for Florida condo buyers! 

New rules just went into effect on October 15, 2019 for buyers wanting to purchase a condo with FHA financing. This is wonderful news for first time buyers, as nationally, 84% of condos purchased with FHA financing were bought by first time buyers... But that hasn’t been the case here in South Florida, as the majority of condos here in the South East have not been eligible for FHA financing since the Great Recession, which began in December 2007.  

When I started in Real Estate back in 1998, I sold lots of condos to first time buyers using FHA financing. It was wonderful for young people just starting out, as they could buy an inexpensive property with just 3% down. FHA down payments now range from 3 ½  - 10% depending on the buyer’s credit score. After the Great Recession, many condos ran into big problems. People fell delinquent on their condo association payments, rental complexes were converting to condominiums and Investors who had bought up 10 & 20 condo units just stopped paying the condo dues and let the units go into foreclosure. This is why many condos in Florida don’t allow renting or have strict rules on investors purchasing units and renting them out right away. Many condos require owner occupants only or require buyers to own the unit for a year or even 2-3 years before renting them out.

Condos stopped renewing or applying for FHA approval, and if you went to HUD’s website to search for FHA approved condos in South Florida, you’d pretty much come up empty. This is still the case, but now that HUD has revised their rules on FHA backed condos as of October 15, 2019, hopefully more condos will start applying for FHA approval again.  

In the meantime, the new rules allow for some condos to be eligible for FHA financing, even if the condo project isn’t on HUD’s FHA approved list! This used to be known as a spot approval, but FHA spot approvals have become pretty much non-existent… until now… now FHA is allowing what they call a single unit approval process.  

Summarizing the 124 page document on FHA Project Approval for Single Family Condominiums and 1081 page FHA Handbook that was updated on October 15th, the main points are as follows: 

1. The name “Single Family Condominiums” refers to one-family units located in a multifamily building (condo).

2. Lenders must follow rules under the Direct Endorsement Lender Review and Approval Process (DELRAP)

3. The condo must be purchased by a buyer intending to be an owner occupant.

4. The condominium must show financial stability. In Florida, one of the biggest stumbling blocks for financing condos is whether the condo has 10% of it’s yearly budget set aside for reserves. This is still a requirement for FHA approval, and many condos don’t have reserves set aside. The condominium must keep separate accounts for operating expenses and reserve funds.

5. FHA used to limit the amount of commercial space in a condo to 25-35%. They have increased this to 49%. We don’t have a lot of buildings falling into this category here in Broward County, but there are probably more in the downtown Miami area. Garage parking used to be considered commercial. They’ve changed this and now the garage parking is considered residential.

6. FHA used to require at least 50% of units in a building to be owner occupied. They’ve reduced this to 35%. So if a building has a lot of investor owned units, this should help.

7. No single owner or investor can own more than 10% of the units in a building (Individual Owner Concentration). For buildings with less than 20 units, no single owner or investor may own more than 1 unit.

8. No more than 15% of the units in a condominium project can be in arrears (no more than 60 days late on condo association dues).

9. The condominium must carry master insurance policies, both for hazard and liability insurance. Fidelity insurance must be in effect for officers, directors and employees of condos with more than 20 units. Flood insurance is required if the condo is in a flood zone.

10. The condominium can not be subject to any current litigation that relates to safety, structural soundness, habitability, functional use, or any other litigation that would not be covered by insurance.

11. There are additional requirements – such as new buildings must be at least 1 year old. The condominium must have at least 5 units. Manufactured homes do not qualify. Co-ops do not qualify. Condo Hotels do not qualify.  

*** The biggest obstacle I see with these new rules is there can only be 10% FHA Concentration in a condominium.  This means for the new single unit approvals, if more than 10% of the units were purchased with FHA financing, they won’t be approved. I sincerely hope HUD will rethink this rule. The National Association of Realtors will be doing their best to influence HUD on this rule, as it doesn’t make sense. Everyone wants the American dream of home ownership.  Why limit the number of FHA loans in a building! Hopefully as condos approach the 10% FHA concentration, they will apply to be an FHA Approved Condo. Condos that have gone through the process to become FHA approved can have up to 50% FHA concentration.

Many condominium boards did not feel it was worthwhile to apply for FHA approval, as the process could take up to 6 months and was only good for 2 years. The approvals are now good for 3 years, with a 6 month grace period for renewing. And the renewal process is supposed to be much easier now, only requiring an updated re-submission package rather than a whole new certification.

I will personally be going out and talking with Condo Association Board Members, trying to persuade them to apply for FHA approval. In the meantime, I hope to see more first time buyers and people relocating to Florida taking advantage of this new opportunity. If you have questions or would like help buying a condo, please feel free to give me a call!  ~Debbie Bates, Coral Shores Realty (954)557-7036 / debbie@SouthFLHomes.com.

Sources: FHA Single Family Housing Policy Handbook 4000.1 with new sections: Section II.A.8p Condominiums and Section II.C Condominium Project Approval, pages 477-496 & 510-537.

 

Posted in Buying a Condo
June 22, 2019

South Florida - Buyer or Seller's Market?

People always ask, How's the Market?  Is it a Buyer's Market or Seller's Market?

I recently had one of my past clients ask me that question. She's in Sunny Isles. I've always loved Sunny Isles, but there's been an onslaught of new construction, making traffic on A1A (aka Collins Ave) nearly come to a stand-still, no matter what time of day you're there. My client/friend has actually taken to calling Uber quite often, instead of venturing out in her own car. And of course whenever she can WALK, she does!

So I decided to take a closer look at market statistics and thought others might be interested in seeing what's going on around South Florida. 

Sunny Isles: As of today - June 22, 2019, there are 1669 Active listings. These are properties currently on the market. In order to figure out whether it's a Buyer's market or Seller's market, we look at how many properties have sold in the past month. 52 properties have sold. So that means in order for all 1669 properties to sell... if nothing new came on the market, it would take 32 months to sell all those listings. That's a very long time and definitely makes Sunny Isles a Buyer's market. Typically 5-7 months' worth of inventory is considered a "NORMAL" market.

Now I could break down those 1669 properties by price, and we'd find the lower priced properties certainly sell more quickly. So anything on the lower end of the price range is more likely to give the advantage to Sellers, but it seems to me all the big condos that have gone up in the past few years are not a good thing for Sunny Isles.

This made me curious about other areas of South Florida. I personally live in Fort Lauderdale, but work throughout Broward County and parts of Miami & Palm Beach. So I'll cover some of these areas to see if they are currently in a Buyer's market or Seller's market.

Fort Lauderdale: There are currently 2427 Active listings and 364 Closed in the past 30 days. That's 6.66 months' inventory. This is considered a "NORMAL" market. I was curious, so I wanted to break this down further, by property type and price. Over all price ranges, Single Family Homes have an inventory of 5.6 months and Condos have an inventory of 7.72 months. Still pretty normal. But when I'm out showing properties, I still find that the lower priced Single Family Homes sell pretty quickly! So looking at this further, I found that Single Family Homes under $1M have only 3.98 months' worth of inventory! That's a pretty good Seller's market! You're only looking at a Buyer's market when you get into luxury properties over $1M. And even in the $1M - $2M, it's not a strong Buyer's market, averaging about 8 months' worth of inventory.

Looking at Fort Lauderdale Condos, we're at about a 6 month inventory up to $500k. That's a nice "Normal" market. If you're looking at condos up to $1M with a direct ocean view, we're at 5.5 months' inventory. Anything over $1M moves into the Buyer's market category.

Here are some statistics on some of the other surrounding cities.

Plantation: 467 Active listings and 133 Closed Sales in the past 30 days. So that's only 3.5 months' worth of inventory. Plantation is still a Seller's market.

Weston: 470 Active listings and 105 Closed Sales in the past 30 days. 4.47 months' worth of inventory. Weston is still a Seller's market.

Davie:  437 Active listings and 84 Closed Sales in the past 30 days. 3.44 months' worth of inventory. Davie is still a Seller's market.

Sunrise:  516 Active listings and 140 Closed Sales in the past 30 days. 3.68 months' worth of inventory. Sunrise is still a Seller's market.

Tamarac: Wow! Tamarac is doing great! Tamarac has a good percentage of 55+ communities. When I started in Real Estate back in 1998, properties in 55+ buildings could take awhile to sell. But look at this! Currently there are 510 Active listings and there were 177 Closed Sales in the past 30 days. That's 2.88 months' worth of inventory. Tamarac is a big Seller's market!

Coral Springs: 557 Active listings and 164 Closed Sales in the past month. 3.4 months' worth of inventory. Seller's market.

Looking back in Miami, let's see how some of the other cities - other than Sunny Isles are faring.

Aventura: 1676 Active listings and 81 Closed Sales. That's almost 2 years' worth of inventory. Definitely a Buyer's market!

Miami Beach: 3385 Active listings and 159 Closed Sales. About 22 months' worth of inventory. Buyer's market!

Coral Gables: 723 Active listings and 64 Closed Sales. 11.29 months' worth of inventory. I thought maybe the Single Family sector would fare better than Condos, but found Single Family Homes worked out to 10.18 months' inventory and Condos worked out to 13 months. Not very good for Sellers in Coral Gables. Buyers should be able to negotiate here!

Pinecrest - nice area, thought this would be more of a Seller's market, but there are 260 Active listings and only 22 Closed Sales in the past month. About 1 year's worth of inventory. This is a Buyer's market.

Homestead is doing pretty well - there are 813 Active listings and 182 Closed Sales. 4.46 months' worth of inventory, so Homestead is still a Seller's market as per statistics from the last month.

Looking up in Palm Beach, I looked at Boynton Beach. There are 1300 Active listings and 352 Closed Sales in the past month. That's 3.69 months' worth of inventory. Good Seller's market in Boynton Beach!

Delray Beach: 1570 Active listings and 344 Closed Sales in the past month. 4.56 months' inventory. Delray Beach is a Seller's market.

Jupiter: 669 Active listings and 199 Closed Sales. 3.36 months' inventory. Jupiter is a Seller's market.

I found this all very exciting, but am guessing your eyes are probably crossing and it's not terribly exciting for you, the reader! And this all began with my client asking if Sunny Isles is currently in a Buyer or Seller's market. She'll probably think twice before asking me How's the Market again!

If you ever have questions about Real Estate in South Florida, please give me a call at 954-557-7036 or email me! I'm always happy to talk Real Estate! 

 

 

 

March 25, 2010

Buying a Condo in South Florida

Condos in Florida 

As we see property values increasing and interest rates starting to creep up, it's getting increasingly difficult for first time buyers to purchase their first home.  In South Florida, it's virtually impossible to find even a small, 50 year old single family home under $300k.  So many buyers turn to condos.  If you're a cash buyer, that's wonderful - you'll have many condos to choose from! But if you plan to get financing, it might not be quite as easy as you thought. 

Back in 1998 when I started in Real Estate, condos were a great option for first time buyers.  You could purchase a condo using FHA financing, which only required 3% at the time.  If you had 5%, 10% or more, that was just icing on the cake!  A nice 2 bedroom condo could be purchased under $100k, so you only needed $3000 + closing costs.  It was easier to buy a condo than to rent!

Fast forward to 2003, 2004 when many rental communities decided to "convert" to condos.  Investors were in a frenzy to buy up 5, 10, even 20 of these units, expecting to flip them and make thousands on each of them.  But then BAM!  The market crashed in 2006 and all those investors found they couldn't flip the units and they couldn't afford to pay the monthly maintenance fees on multiple condos.  So they let them go... let the banks take them back, or let the condo associations foreclose on them.

This caused great problems for many condo associations.  Here they were with as many as 25 to 50% of their units empty, not paying their maintenance fees.  Condo associations struggled to pay their insurance, roof repairs and other obligations.  Some even went bankrupt.

Fast forward again to present day 2018.  The market is great, most condos have recovered and are 100% occupied.  Owners are paying their monthly fees.  Things are good!  Except all those condos lost their FHA approvals, making condo purchases with FHA almost unheard of today.  Here's what page after page of the FHA list looks like. This snippet is from Fort Lauderdale, but it's the same throughout Plantation, Sunrise, Tamarac and all the cities in South Florida. In case it's too small to read, the red lettering for each condo says EXPIRED.

FHA Expired Condos

In Broward County, there are 427 condos listed on HUD's condominium list.  There are 5 that have HUD's approval for FHA financing.  

  • Hallmark of Hollywood - 2 bedroom condos start in the $300's and go up to the high $400's.  This isn't real helpful for most first time buyers. Hallmark's FHA approval expires October 2018, so we'll see if they apply to renew their approval.
  • Parc Village in Plantation - this is a nice community, with condos that are designed like townhouses & villas. With prices in the $200's, this is a great option for first time buyers, but units tend to sell in the blink of an eye here! FHA approval at Parc Village is good until April 2020.
  • The Preserve at Walnut Creek Condo in Hollywood - another great option, with condos under $200k, but currently there are no listings here and their FHA approval expires August 2018.  Hopefully they will renew.
  • The Venetian Condo on Las Olas - this condo is located near the beach on Fort Lauderdale's upscale Las Olas Blvd. With intracoastal waterway views, this is a great condo, but probably not feasible for the average first time buyer, with prices starting in the $400's.  FHA approval at the Venetian is good until June 2019.
  • Lastly, there's Yardley Condominium C, which is a 55+ community in Tamarac.  With prices in the mid $100's, this is a great option for buyers who are 55+.  Yardley's FHA approval is good until May 2019.

With these being the only options for FHA buyers wanting to purchase a condo, buyers need to explore conventional financing.  There are now 3% and 5% down payment conventional loans available, but with these, we have to look at Fannie Mae requirements.  In order to get a conventional loan with less than a 25% down payment, condo associations must be able to successfully answer the lenders "condo questionnaire".  Some of the questions in this questionnaire pertain to how much the condo collects for "reserves".  Reserves are meant to cover expenses such as roof repairs, elevator repairs, repaving of the parking lot and many other maintenance issues that crop up over time. 

In order to pass Fannie Mae requirements, the association’s budget must show that they collect at least 10% of their yearly income to put toward reserves.  It's unfortunate, but very few condos collect 10%.  Many don't have any reserves at all.  Some might have 5%.  But without that magic 10%, no buyer will be able to purchase unless they have a 25% down payment.  There are other questions on the questionnaire that can cause a condo to be turned down, such as the number of rental units in the complex , the number of investor owned units, whether there's any pending or ongoing litigation against the association and so on.  

Fannie Mae has a list of approved condos that they publish on their website.  I check it often, but on their current 14 page list, there are approved condos in Orlando, Naples, Fort Myers and other cities, but only one single condo in Broward County, which is a 55+ community in Margate. They have a conditional approval which expires July 2018. There are a handful in Miami.

With so few condos in South Florida on HUD's list or Fannie Mae's list, and so few that are able to successfully pass the condo questionnaire, it has become rare to find a condo that can be purchased with less than 25% down. But now and then a condo will pass this scrutiny. Yippee!  How exciting! You have a situation where the bank will approve a loan with 5% down, but guess what?  In many cases, the condo association has their own rules and requires 20% down!

I've personally found the current condo situation to be extremely frustrating.  Not only for myself, but for so many buyers who REALLY want to buy! 

At this time, there is a loan program available that allows buyers to purchase with 10% down.  Of course all buyers don't have 10% saved up, but it's easier to save 10% than 25%.  This 10% program consists of a 1st mortgage of 75% and a 2nd mortgage (HELOC or Home Equity Loan) of 15%.  Structuring the purchase in this manner allows buyers to be putting down 25% in the eyes of Fannie Mae.  Buyers must have excellent credit - 700 credit score or higher and a low debt to income ratio.  But at least it's helping some buyers achieve their dream of buying a condo in Florida.

If you’d like me to put you in touch with a lender who offers this program or if you have questions about condos or anything Real Estate related, you can contact me at 954-557-7036 or debbie@SouthFLHomes.com.  There are a few FHA approved condos in Miami and Palm Beach, so if you’re interested in those areas, please contact me and we can explore those options too.

Posted in Buying a Condo