Condo Rules and Financing Impacts Condo Sold Prices in 2011

Wednesday, February 15, 2012

by Jan McNulty

There are two issues both impacting the price of condominiums in the past year. Below is an example of the impact of Associations rules & lending possibilities to condo sales:

1^st example shows the investors can not buy and the financing must be cash or conventional.

2^nd example shows the investor can buy and rent the unit out, but financing is still cash or conventional.

Property Type: Attached Single Status: Closed, Pending Area: Palatine, Arlington Heights, Mount Prospect, Des Plaines (Equals Any) Type Attached: any of (Condo) and none of () and all of () # Garage Spaces: 1 or more Months Back: 12 Months For Investors, Can Owner Rent Unit? (Y/N): No (Equals Any) Sale Terms: any of () and none of (FHA, VA) and all of ()

	Total	Average LP	Average MT
Sold	78	$141,124	280
Active	0	$0	0
Under Contract	6	$98,266	230
Other	0	$0	0

	Max	Average	Median	Min
LP (84)	$359,000	$138,063	$124,900	$54,900
SP (78)	$330,000	$127,394	$110,000	$45,000

Property Type: Attached Single Status: Closed, Pending Area: Palatine, Arlington Heights, Mount Prospect, Des Plaines (Equals Any) Type Attached: any of (Condo) and none of () and all of () # Garage Spaces: 1 or more Months Back: 12 Months For Investors, Can Owner Rent Unit? (Y/N): Yes (Equals Any) Sale Terms: any of () and none of (FHA, VA) and all of ()

	Total	Average LP	Average MT
Sold	47	$178,210	231
Active	0	$0	0
Under Contract	1	$167,500	111
Other	0	$0	0

	Max	Average	Median	Min
LP (48)	$559,000	$177,987	$157,437	$55,000
SP (47)	$520,000	$167,914	$145,000	$50,000

As you can see, the investor or buyer who has the safety net of being able to rent the property, the property sales average was median price of 145000. With the amount of insecurity with the economy, that safety net has a value in the market place.

Next examples allows for FHA/VA financing for purchasers. Currently condo's that are approved for FHA are very hard to find because of lack of understanding by the associations. The difference to a buyer is that their down payment would be 3.5% with MIP (normally known as PMI), rather than conventional financing requiring as much as 10% down, with PMI.

Financing today is crucial. Conventional buyers need to save 10% down, whereas an FHA buyer needs 3.5% down and VA still can buy with no money down.

The 1^st example is the investor is not welcome, but FHA & VA financing is available to the buyer.

The 2^nd example is the investors are welcome and FHA & VA financing is available to the buyer.

	Total	Average LP	Average MT
Sold	14	$113,013	188
Active	0	$0	0
Under Contract	1	$34,900	23
Other	0	$0	0

	Max	Average	Median	Min
LP (15)	$189,000	$107,806	$114,000	$34,900
SP (14)	$160,000	$102,307	$106,250	$55,000

Property Type: Attached Single Status: Closed, Pending Area: Palatine, Arlington Heights, Mount Prospect, Des Plaines (Equals Any) Type Attached: any of (Condo) and none of () and all of () # Garage Spaces: 1 or more Months Back: 12 Months For Investors, Can Owner Rent Unit? (Y/N): Yes (Equals Any) Sale Terms: any of (FHA, VA) and none of () and all of ()

	Total	Average LP	Average MT
Sold	11	$148,954	336
Active	0	$0	0
Under Contract	0	$0	0
Other	0	$0	0

	Max	Average	Median	Min
LP (11)	$219,900	$148,954	$134,900	$75,000
SP (11)	$215,000	$137,763	$131,000	$60,000

Financing today is crucial.

Conventional buyers need to save 10% down, whereas an FHA buyer needs 3.5% down and VA still can buy with no money down. Because of the recession or adjustment in the market place, the prices are much more affordable. The investor or buyer who wants a safety net of being able to rent the property, the property sales are showing a huge value in the market place.