It sounds like a golden age for condos.
There are 76.4 million baby boomers out there, and a handful of them – 3.9 million and growing – are empty-nesters who have moved from their oversized homes to the popular 55+ condo/townhouse communities.
On top of that, US cities bled residents out to the suburbs from 1950-2000, but the 21st century has suburbs giving cities transfusions of new life. Chicago, New York City, and Philadelphia – 3 of the 5 largest cities in the country – each gained more residents from 2010-2013 than they did the entire previous decade. Smaller cities like Charlotte, Pittsburgh, and Oakland are going through transformations as well. As a shift towards the walkable, high density neighborhood has these and other cities beginning an ascent that could last decades, the condo market should be preparing for liftoff.
That’s not to say housing is struggling. At the end of 2015 the National Association of Realtors (NAR) reported that the six month outlook for single family homes was strong in 48 states. One reason is that the FHA is offering a great deal to customers in single family homes.
In the same report, the NAR described the condo market as “weak” in 41 states. Why? The FHA has made it nearly impossible to buy a condo.
Getting an FHA loan on a condo has always been tricky. With a single family home, only the buyer needs to be approved. In a condo, both the buyer and the condo association need to be approved. Pushing matters towards impossibility, the FHA invoked two, devastating new rules on condo residents and condo associations several years ago which forced the industry into decline: