July 13, 2009 – According to the latest stats released by the Midwest Real Estate Data LLC’s multiple listing service, Chicago condo sales from March through May of this year have fallen by double digits from last year’s numbers. In March, condo sales dropped 41% from ’08 and in April they fell 55% from last year. May has posted the biggest decline by 56% from May of ’08. But because condo prices have had less of a drop than single-family homes, David Hanna of the Chicago Association of Realtors was quoted in the Tribune as saying that, “This is telling us that this is the healthiest segment of our real estate market.”

The article went on to say though that recent changes in both Freddie Mac’s and Fannie Mae’s loan policies have made it tougher for buyers to get a mortgage for a condo. Previously, the companies had required that a condo building be at least 51% sold before they would guarantee a loan for a unit. Now it has to be at least 70% sold. Add on the new appraisal fees, higher credit scores needed and fees for those who can’t come with a 25% down payment and it thins out quite a few buyers.

Partly for those reasons, both buyers and Chicago real estate developers are turning to FHA as a lifeline. In the article, it stated that Appraisal Research Counselors estimates that nearly 4,700 new construction condos and townhomes will be completed this year and fewer than 60% had contracts as of the first quarter. Since FHA loans only require a condo building to be 51% sold and a qualified buyer to have a 3.5% down payment, more developers are trying to get FHA approval for their projects.

From October to February, 23% of all new homes purchased were with an FHA loan. And since October there have been 68 Chicago condo towers granted FHA approval with another 51 on the waiting list, according to the article.

Terrie Whittaker of New West Realty stated that their development company never really bothered with FHA, but with market conditions as they are they pursued approval for 1555 Wabash and got it. She told the paper that, “Now we care deeply and passionately. I care about anything that will help me sell a condo. I still have 47 or 46 percent of the building to sell.” The tower started first deliveries last week.

More Chicago Condos will probably seek FHA approval this year and we’ll keep you updated on those that do.

[tags]1555 Wabash, Chicago Condos, Chicago Real Estate[/tags]

This entry was posted on Monday, July 13th, 2009 at 3:40 pm and is filed under Mortgage Information.