Maryland REALTORS®, along with the National Association of REALTORS® (NAR), applauds the Department of Housing and Urban Development (HUD) for finalizing new Federal Housing Authority (FHA) regulations which significantly alter the condominium approval process. The new condominium approval process will increase the availability of FHA-backed condo loans, and is expected to yield thousands of new homeownership opportunities nationwide.
"Condos are often the most affordable, attractive option for first-time homebuyers in Maryland, but the absence of FHA condominium financing made it harder for potential homebuyers to enter the market," said Merry Tobin, Maryland REALTORS® President.
"In Maryland, these new rules have the potential to transform our housing market and state economy, easing affordability constraints, maximizing first-time homebuyer assistance programs and putting sustainable homeownership in reach for a number of buyers that would have continued to be denied this critical opportunity. Maryland REALTORS® supports the FHA's regulatory changes which have the potential to make homeownership a reality for many in Maryland."
Specifically, the new guidance extends certifications from two years to three, allows for single-unit mortgage approvals, provides more flexibility with owner/occupancy ratios, and increases the allowable number of FHA loans in a single project. The rule will go into effect in mid-October - 60 days from publication. HUD believes the changes will extend critical benefits to aspiring homeowners and confirm the agency is properly serving the public. The vast majority (84%) of FHA-insured condo buyers have never owned a home before.
During NAR's most recent existing home sales report, June condominium and co-op sales were recorded at a seasonally adjusted annual rate of 580,000 units. The figure represents a decline of 3.3% from May and a 6.5% drop from the same time last year. With more than 8.7 million condo units nationwide, only 17,792 FHA condo loans have been originated in the past year.
NAR Chief Economist Lawrence Yun recently noted that even though median prices for existing condos have risen slightly, their relative affordability means condominiums remain a natural answer to inventory shortages holding back housing sales growth. "Condos are typically more affordable than a detached single-family home, but only a small fraction of condos are FHA-certified," Yun said last month.