Richmond Condo Market on the Mend?
Here’s a good article from BizSense. Excellent quotes from local condo market participants. Are Condos a Good Buy? I have been very leery of the condo market in Richmond for a long time. My main concern, for buyers, is that it’s not a mature market. Sure there have been condos in Richmond for a long time, but the bulk of the development came during the boom and the market has not reached equilibrium. Although, the article points to some evidence to the contrary. I’m still undecided. I think First Time Buyers should stick with properties that have straight forward financing, are located in established locations and will experience steady appreciation. Condos can be a great buy for some people, but what if you’re a first time buyer and then the financing rules change after you buy; and you can’t sell? We manage about 40 condos that we had to convert to rentals because our clients couldn’t sell them, so I think it is a valid concern.
Bigger isn’t always better.
That’s proving true in several senses for condo developers around Richmond.
Take the case of the Hamlet Cleaners conversion project on Stafford Avenue in the Fan.
Chris Johnson of Monument Construction converted a defunct dry cleaners into 16 units priced between $119,000 and $209,000. Since finishing construction in August, he has sold 11 of the units.
That’s probably the envy of the local condo industry.
At the much more ambitious Miller and Rhoads condos downtown, Taylor Steele, an agent for Virginia Realty & Relocation, said they’ve closed on seven units out of 133 since coming online in the spring. But interest is high, he said, with 10 to 20 showings a day on the weekends.
One obstacle facing the Miller and Rhoads project is that it cannot get lending approval from the Federal Housing Authority, and without that buyers have a much harder time getting financing.
It has become much harder for first-time homebuyers to qualify for conventional mortgages to buy a condo unit. FHA-approved loans have taken a bigger share of the market, because borrowers only have to put 3.5 percent down. (The agency recently began requiring 10 percent down for buyers with a credit score below 580).
To receive an FHA loan to buy a condo, the building had to be at least 50 percent owner occupied. As more buyers began to rely on these loans, it has made selling much harder, especially for large projects like Rocketts Landing and Miller & Rhoads, which were conceived when credit was easier to get.
