Recently, I was talking with someone regarding the oversupply of condominiums in the Blacksburg market, and I was asked what I thought it’d take for condos to begin selling again. I tried to be as honest as possible in my answer, saying that two things needed to happen in order for the condo market in Blacksburg to begin picking up again:
- the economy needs to improve, and people will need to feel comfortable spending discretionary income on what is often second homes and/or investment properties. In an uncertain economic climate, many folks with cash to spend are reluctant to do so, because of the unknown around the corner.
- financing guidelines for condos will need to relax. Right now, conventional, fixed financing for condominiums is extremely difficult to get, in large part because most financing guidelines are currently requiring that more than 50% of the complexes be owner-occupied. In a college town, with 26000 students and more than 60% of them living off-campus, you can imagine how difficult that ratio is to reach.
When I looked at the Year To Date sales numbers for Blacksburg condos, and compared that to years past, the results weren’t surprising … prices are steady with where they were in 2006, it’s taking longer to sell, and fewer are selling.
|Year||# of Sales YTD||Median Sales Price YTD||Median DOM YTD|
Compounding the issue further will be the new FHA guidelines coming out November 1 2009. Once those new guidelines arrive, condo projects will need to be FHA-approved, which as of right now means they’ll need to apply for approval – and that could take several months! During that time, if an owner wants to sell a condo in a project that has NOT been FHA-approved, or a buyer wants to buy in that same project, than they’ll need to wait for that approval to come through before buying or selling. Additionally, only 30% of the loans in any given complex can be FHA.
After November 1 2009, will it be tougher to buy or sell a Blacksburg condo? Yes, it looks like it. Can it be done? I think so. But we’ll have to be patient.
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