Solano condo market caught in conundrum
Condominium values throughout Solano County are recovering from the Great Recession but not nearly as fast as single-family home values.
The reason for the painfully slow condo value recovery over the past eight years is very few condo projects are getting FHA or VA approved. In order to obtain a VA or FHA loan on a condo, the project’s homeowners association must be approved by FHA and VA.
Most of the condo projects in Solano County and around the North Bay up until 2004 were approved for FHA and VA but these approvals expired in 2005 and 2006 when FHA and VA were no longer needed for buyers with little or no downpayment.
During this period of time, people could buy condos with zero down and get conventional prime or subprime financing. This was when a person could buy a condo for $350,000 with nothing down, no proof of income and marginal credit. No wonder the bubble burst in 2008!
When values crashed in 2008 and 2009, condos were especially vulnerable and affected because of the homeowners association challenges. Not only were there a lot of foreclosures but many HOAs had serious HOA delinquency problems and abandoned condos.
The last thing the condo projects were worried about was keeping their FHA and VA project approval.
Now that the economy and real estate market is back to normal, the condo projects and all homeowners associations will realize that now is the time to get their condos approved with FHA and VA to increase marketability and, more importantly, to the condo owners’ increase in market values.
VA and FHA buyers make up 50 percent of the buyer population in Solano County, so obviously a 50-percent increase in demand will increase values.