Why Isn’t the Condo Market Rebounding?

July 24, 2015

NEW YORK – July 23, 2015 – While construction of single-family homes and multifamily rentals is on the rebound, condo construction sunk to new lows. Any rebound in the condo construction market has been delayed by stringent rules on condo mortgages that took effect post-housing crisis, and stronger demand among young people for rentals.

Condo construction in the first quarter comprised only 5.5 percent of all construction of multifamily housing – the lowest ratio since the Commerce Department began tracking the data in 1974. Historically, condo construction falls at a 24 percent average.

Condos traditionally offer higher returns for investors than apartments.

“Many developers would rather be building condominiums,” says Peter Bazeli, senior vice president at New York-based real estate consulting firm Weitzman Group. “With condos, you’re paying down debt with every closing and then putting money in your pocket right away.”

But many factors hamper the condo market’s recovery. For one, economists say young adults have been flocking to rentals instead, and condos typically cater to entry-level buyers. Also, construction loans limit the supply of condos built. Developers say they can get a construction loan for about 75 percent of the cost of building an apartment complex, but only about 50 percent for a condo complex because lenders deem it a higher risk.

The Federal Housing Administration (FHA) tightened its lending standards from 2008 to 2012, which has made condo funding even tougher, too. In order for the FHA to insure mortgages in a condo complex, at least half the units must be owner-occupied, and no more than half can be FHA-insured. For condo projects under development, at least 30 percent of units must be under contract for sale before the FHA will start backing mortgages.

Economists say those factors have kept the condo market sluggish and still far from recovery. The median condo resale price in May was $216,400, about $15,400 less than its pre-crisis peak in June 2005. On the other hand, the median resale price for single-family homes in May was $230,300 – only $600 less than its pre-crisis peak in July 2006.

But some developers see glimmers of a condo rebound forming.

“Rising apartment rents provide renters more reason to buy instead of renting,” the Journal reports. “Job growth is improving for young would-be buyers. And real estate lobbyists say they are making inroads in Washington to build support for easing the FHA restrictions on condo mortgages.”

Source: “Condos Left Behind in Housing Rebound,” The Wall Street Journal (July 21, 2015)

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Dig this app! We at Imagination Realty Love it!

March 15, 2013

New Remodeling App Compares Home Improvement Projects ~ Zillow.com/Digs

The saying, “there’s an app for that” is proving to be true once more. The new Zillow Digs, launched by Zillow.com, is hoping to corner some of the social media market share that houzz.com and pinterest.com have in the virtual real estate world.

After you check out that link check out www.ImaginationRealty.com.

Zillow.com is the website that allows visitors to get an estimate (or as its called on the site, “zestimate”) on the value of homes. The site created quite a stir because of the enormous amount of real estate data it was providing in the Internet world when it launched seven years ago.

Today, it touts that it helps homeowners, buyers and sellers, renters, real estate agents and mortgage professionals as well as landlords and property managers “find and share vital information about homes, real estate and mortgages”. The company’s goal is to empower consumers with important real estate information.

That’s why it makes sense that this same company would launch an app that is helping consumers learn more about home improvement. The popularity of social sharing sites proved that there’s a market for uploading attractive remodeling and real estate photos and now there’s Zillow.com/Digs.

You’ll lose track of time perusing through these pretty remodeling pictures. It’s similar to the other social sharing sites where you can upload, pin, and like the photos, but on this platform, you can also see an estimate for the remodeling work.

The free app works on the iPad and Web.

This new app serves not only as a comparison for those searching for costs and projects that might be similar to their own remodel but also as an inspiration for homeowners looking for new, fresh home improvement ideas.

The Pinterest-like boards will be familiar to those who are used to pinning. It also offers a direct login/connection to Facebook and Twitter for simple sharing, commenting and extended posting.

Some of the photos featured on the Zillow Digs app are on the market while others are not currently listed. Either way, it seems this is yet another Zillow mark of genius as those interested in real estate will find the beautiful pictures captivating and the cost-calculations intriguing. The app also helps connect consumers with industry professionals who can help get the remodeling work you need completed.

REF: February 18, 2013  Phoebe Chongchuain Home Improvement, Home Selling