New financing rules for condos
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.
If you are considering a condo purchase here in Salem, Oregon contact me to get on a condo list, or start your search for condo units here.
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March 18th, 2009 at 6:26 pm
I heard the Meridian just had an open house and that there was lots of inventory left to sell.
March 18th, 2009 at 8:38 pm
Last I heard 9 had sold.
March 19th, 2009 at 12:27 am
When you say “I heard 9 had sold,” do you mean closings have occurred? I admit to a real case of skepticism about all of those places — they are priced as if Salem was Portland’s Pearl District, but the incomes in this area won’t support those per-foot costs at all ($275 and up), on top of which are monthly maintenance/condo fees. If they are selling, I am (1) amazed; and (2) feeling sorry for the buyers — good luck selling at anything like your purchase price. With the flood of shorts available now, with more to come, it can’t be easy selling those units at anything like the asking price.
March 19th, 2009 at 9:56 am
I know that 2 have sold in church street and actually closed. I am not sure the Meridian is move in ready so that would be 9 under contract and ready to close when completed.
Yes the prices of the condos are not commensurate with the incomes of the average Salemite. Even some doctors are having pay freezes as hospitals are gearing up for more unpaid bills from people. It would have been nice if there were more condos geared towards prices that state workers could afford. Even the townhomes on Market are out of reach for many people.
I think the second biggest issue for selling them is that people that want to live and work downtown still don’t have a good way to go grocery shopping easily. Usually the point of living downtown is to not have to use a car.
This latest announcement makes a difficult situation even worse.
March 21st, 2009 at 9:33 pm
Exactly — that’s why Pringle Creek is having so much trouble marketing itself as a “green” development . . . it’s only green if you overlook the forced dependence on autos that the location demands.
March 21st, 2009 at 10:15 pm
I guess I’m thinking that people would maybe work at t-mobile or some of the other business in the industrial park close by. There were some large commercial developments slated to be built there. It wouldn’t be a fairly easy bike ride downtown from there.
It’s a fabulous idea, but the homes are just outside the price range of most Salemites.