The Northwest Iowa Regional Board of Realtors® along with the National Association of Realtors®, today commended the Department of Housing and Urban Development for finalizing new Federal Housing Authority condominium loan policies. By increasing the availability of FHA-backed condo loans, these changes should yield thousands of new homeownership opportunities nationwide and help alleviate affordability restraints impacting northwest Iowa’s housing market.
“Condos are often the most affordable, attractive option for first time home buyers and various other groups of Americans, but the absence of FHA condominium financing threatened to raise the cost of housing for people across the country,” said Mark Vos, President of the Northwest Iowa Realtor® Board and Realtor® with United Real Estate Solutions in Sioux City. “Here in Sioux City, and across the 13 Northwest Iowa counties where our Realtor® professionals work, these new rules have the potential to transform our housing market and regional economy, easing affordability constraints, maximizing first-time homebuyer assistance programs and putting homeownership in reach for countless families that would have continued to be denied this critical wealth building opportunity.”
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.
“We are thrilled that HUD has taken this much-needed step to put the American Dream within reach for thousands of additional families,” said NAR President John Smaby, a second generation Realtor® and broker at Edina Realty in Edina, Minnesota. “This ruling, which culminates years of collaboration between HUD and NAR, will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people.”
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 home 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.
The Northwest Iowa Board of Realtors® encompasses nearly 500 members, who are real estate professionals in a 13 county region across the northwest quadrant of Iowa.