Before we get to the October Hoboken Condo sales results, some news from Fannie Mae. They have just made it a little easier to buy a condo – good news for Hoboken. Under their new Selling Guide, there are some game changes as to how condo buyers receive financing:
- Allowable commercial space in a condo project is increased from 20% to 25%. Think of all the buildings along Washington, Hudson and 14th Streets with stores in the lower level. An exception is no longer required if commercial space is above 20% as long as it is less than 25%.
- For condo projects of five (5) to twenty (20) units a single entity can own up to 2 units in the project. Borrowers no longer have to use a portfolio lender if one person or entity owns multiple units in Hoboken’s smaller condo buildings.
- The number of days for which 15% of the unit owners may be past due on HOA fees is now 60 days (increased from 30 days). This is only monitored when a full review is required. This is for investment property purchases or when a buyer is putting down less than 20%.
- Presale requirements for new condo projects have been decreased from 70% to 50%. Typically Fannie Mae allowed you to go down to 51% on an exception basis. Believe it or not the extra 1% will make a difference.
- If the mortgage only calls for a limited review to approve the condo project, Fannie Mae will no longer require review of fidelity/crime insurance. This was a hassle with projects over 20 units. However, if a full review is required, it will still be monitored.
- Income for the project that is non-incidental income is now allowed as long as it does not exceed 15% of the project’s budgeted income. Non-Incidental income can now be used if the association has an agreement with a cable, telephone or internet company. An example of this would be the existence of a cell phone tower on the building.
These changes are substantial and will help make our lives easier. There are now more options for financing on certain projects. Great thanks to Ted Schirm of Mortgage Master for bringing these important changes to my attention.
We have results for October. Average sales were down a bit from September and slightly up over last October. It looks like there may have been more sales of smaller, lower-end units last month. The average price per square foot is still over $600. Median price per square foot is actually up over last month. Three-bedroom buyers, take note. The three-bedroom market continues to skyrocket with prices now just about at a million. That’s what happens when there is almost no new inventory of large apartments. Other points of note, the “discount off list” is down dramatically from last year. Inventory is still extremely tight. We are approaching the holiday season – traditionally the slowest time of year.