The Wall Street Journal had an article recently about the increase in lending guidelines for purchasing a condo. Now, normally you wouldn’t think that would be such a big deal here in Salem Oregon because we don’t have a lot of condos, but…here is what the article stated.
The government-backed mortgage-finance company stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have been sold, up from 51%. In addition, the company won’t back loans for sales in buildings where 15% of current owners are delinquent on association fees or where more than 10% of units are owned by a single-entity.
This will impact our local Salem Oregon condo market because we have The Meridian, Church Street Condos, and The Rivers all for sale right now. I don’t know for certain, but I don’t think any of them are at 70% sold. This could be a problem for those developers as lenders may be leery to lend on those projects without the guarantees of Fannie Mae.
This is an unfortunate situation for our local developers. The condos are a nice addition to the rejuvenation of our downtown area, and this just makes it harder to pull developers into projects. With lending criteria changing on a daily basis, the rejuvenation and livability of our downtown area may be put on hold as developers have to assess the risk of engaging in large projects.