The housing market is competitive, especially for first-time homebuyers or those looking for homes under $250,000.
Many of those buyers are looking to purchase condominiums, which can prove difficult if the buyer is relying on financing through the Federal Housing Administration. FHA loans require a buyer to make a 3.5 percent down payment on a home. This program is particularly helpful to first-time buyers who may not have a substantial amount of cash to put down, yet have good credit.
In order for a buyer to use FHA financing, the condominium development must be 50 percent owner-occupied and go through a costly recertification process every two years. This recertification process dissuades many developments from seeking to be FHA-approved. In fact, only 10 percent of condominiums across the country are FHA-approved. Take into account the already limited inventory of properties, then narrow it down to the condos that are actually approved for FHA financing, and buyers are left with few options.
Realtors have been aware of this issue for a long time. In fact, last year the National Association of Realtors president testified before Congress, asking them to pass H.R. 3700, the “Housing Opportunity Through Modernization Act,” intended to ease the FHA requirements. The U.S. House unanimously passed the legislation earlier this year, and more than 140,000 Realtors from across the country recently responded to a call to action to our senators asking for their support.
I am happy to say that we are celebrating a huge victory; NAR President Tom Salomone shared the news with Realtors in Nashville on July 15. The U.S. Senate unanimously approved the passage of this bill, and we are now awaiting President Barack Obama’s signature.
This legislation will reduce the owner-occupancy ratio from 50 to 35 percent, making more condo units available for purchase. It also improves the recertification process of previously approved developments and reduces transfer fees.
As Salomone expressed to Realtors during his visit, the “overly burdensome restrictions” on condo financing have put the ability to purchase out of reach for many creditworthy buyers for too long. He praised both the U.S. House and Senate for their support and for putting homeownership back into reach for so many Americans.
Consumers are often surprised to learn how Realtors work behind the scenes for their benefit. Part of what sets Realtors apart in the industry is their advocacy on behalf of homeowners and property rights. This is a prime example of the difference we can make, and we are proud to have this voice.
Denise Creswell is president of the Greater Nashville Association of Realtors. A Realtor is a member of the National Association of Realtors who subscribes to its strict Code of Ethics. Contact her at 615-473-1663 or firstname.lastname@example.org.