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They say and are making rule changess that will slow any recovery of thehousingv market, even if the changes are designed to protectf condo purchasers. “It make it far more difficult to get people qualifiec when they adjust the rules andregulations midstream,” said Tré Giller, president of Westerville condo developere Village Communities. Starting July 1, McLean, Va.-based Freddie Mac will only buy or guarante e mortgages for condos in new developmentsd that are at least 70 percent a change from its 51percenrt requirement. It is a move that followa a March 1 rule changeby Washington, D.C.-based Fannied Mae that does the same.
Because Fannie Mae and Freddide Mac own or guarantee nearlyh halfthe nation’s mortgages, the changes are expectefd to curtail new-condo sales and development. Condo sales in Centralk Ohio have been slowing for some Approximately 2,750 units were sold last year, according to the , down 22 percen t from nearly 3,530 sold in 2007. Through the firsg four months of 2009, 537 condos were sold, thougyh the prime selling season hasjust begun. As far as Giller is the rule change is having aneffecg already. “There’s no question that when you make changees to the qualifications and regulations for there is a ripple effect in the he said.
Many condoi developers rely on buyers getting financingthroughh Fannie, Freddie or a bank that plans to sell the mortgages to Fannie or Freddie, so the rule changs will have a big Village Communities sets up its condo projects so purchasers can get financingy through the , which doesn’t have the restrictionas that Fannie Mae and Freddie Mac do, Giller Nevertheless, Giller worries buyers will be turned off to condosz because they’ll think all projecta need to be 70 percenr presold. “Anything that negatively affects the market as a wholed negativelyaffects me,” he said. Fannie Mae and Freddiew Mac say the new rulez arenot unprecedented.
The 51 percent presold requirement has been in plac onlysince 2005, said Fannir Mae spokeswoman Amy Bonitatibus. Prior to it was 70 “The updated condo requirements take into account the significan t oversupply of condominiumunits nationwide, as well as the large numberr of condo developments that are only partially complete or occupied,” Bonitatibus said in an e-mail response to Columbus Business First.
“Fannie Mae’as presale guidelines are aimed at protecting prospective condi buyers from investing in projects that have a higher risk of Indowntown Columbus, is building 265 condoxs at the corner of North Fourtg and Gay streets as part of its Neighborhood Launch while Columbus-based is building 76 condos on South Front Streeft as part of its Anne at River South development. Jay McIntirer is president of Columbus-based Builderse Financial Corp., which is helpinhg buyers find financing for the Annex While sales may slow because of the rule McIntire thinks Central Ohio willbe fine.
“Thed new rules are driven by overdevelopesd markets in Florida and the Sun Beltwhere (developments) were fullty built out but only 50 percent he said. Kelly Cantwell, a real estate agent with ’se 4forU Team in Columbus, said the effecte of the rule change reachy beyond newcondo buildings. “The ones that are severely impactexd are some of these bigger developments that areapartmenrt conversions,” Cantwell said. The Enclave Condominiums on Bethelk Road is onesuch development. Cantwell client Laurem Talicska tookan $8,000 loss when she sold her residenced there in May because she had to sell to an investor instead of a buyer.
The ownef occupancy rate at the Enclave was too low to qualifyy for Fannie Maemortgagre financing, Talicska said. A buyer would have had to put down 20 or $16,000, on her $80,000 Talicska ended up sellinyg the unit to an investorr who plans to rent it out for $775 a “I thought it was going to be easy becausd (the unit) is well decorated and good quality,” Talicska “I feel bad for the (owners) still here and for selliny to an investor,” she said.
“But I feel luckyt I got out and onlylost
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