FHA to make financing easier for condo owners!
FHA to make financing easier for condo owners!

The Federal Housing Administration has finally issued a long-awaited update to its condominium rules, announcing Wednesday that it will now allow individual unit approval and is taking other steps to loosen requirements that make these properties eligible for FHA financing.

Under the revised guidelines – which take effect Oct. 15, 2019 – an individual condo unit in a building of 10 units or more may be eligible for spot approval if no more than 10% of the units are FHA-insured. For units in buildings with fewer than 10 units, no more than two units can have FHA insurance. The FHA is also extending the recertification deadline for approved condo projects from two to three years, and it will insure more mixed-use projects, or those with more commercial space, to be eligible, stating that approved projects can now have up to 35% of their square footage dedicated to non-residential use.
The agency also loosened restrictions on owner-occupancy rules, stating that eligible condo projects can now be just 50% owner-occupied.

It also said it will insure up to 50% of units in any given project. The FHA said it expects the updated guidelines to qualify an estimated 20,000 to 60,000 more condo units per year for financing. 
Currently, of the more than 150,000 condo projects across the country, only 6.5% are approved for FHA financing. This is something the FHA is aiming to change with the updated guidelines, Department of Housing and Urban Development Secretary Ben Carson said on a call with reporters Wednesday. “FHA is publishing a new rule in the Federal Register that we believe will offer significantly more options for individuals and families to buy a home, specifically the kind of home more and more people are looking for in order to achieve homeownership, and of course that is a condominium,” Carson said, adding that the new rules “will open many doors to buyers who have been waiting on the sidelines, waiting to become homeowners, waiting to share in the American Dream.”

FHA Commissioner Brian Montgomery said the agency has been working alongside stakeholders for three years to update its condo policies. “It had become clear for many years that we needed to update our condo project approval regulations so that, while not exposing the agency to more risk, they are more flexible and less prescriptive and more reflective of the current market than the previous condominium project approval provisions,” Montgomery said on the press call.

The National Association of Realtors was among the of the first trade associations to applaud the agency for finally making the long-awaited move. NAR said the changes, which it has championed for more than a decade, should help alleviate affordability issues for many prospective homebuyers. “We are thrilled that Secretary Carson has taken this much-needed step to put the American Dream within reach for thousands of additional families,” said NAR President John Smaby. “It goes without saying that condominiums are often the most affordable option for first-time homebuyers, small families and those in urban areas,” Smaby continued. “This ruling, which culminates years of collaboration between HUD and NAR, will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people.”


No, The Fed Didn't Cut Mortgage Rates! Some interesting info on the recent Fed Rate Cut

Mortgage rates were mostly unchanged today, which will come as a surprise to scores of consumers who mistakenly believe the Fed's 0.25% rate cut equates to a 0.25% drop in rates.  The Fed does not set mortgage rates!

Actually, to be fair, the Fed Funds Rate (that thing everyone is talking about today) is in fact the basis for Home Equity Lines of Credit (HELOCs) in many cases, but that's it as far as the mortgage world is concerned.  The most common mortgages are determined by other parts of the financial market.
In fact, mortgages actually "turn into" securities that are traded in financial markets as a part of the process that makes them safer and easier for investors to buy. Those securities trade just like other securities, for the most part (e.g. stocks, bonds, etc.), and it's the price movement of those securities that most directly dictates mortgage rates.  Shockingly enough, these are known as Mortgage-Backed Securities (MBS).

Unlike the Fed Funds Rate, which only changes once every 6 weeks, if at all, MBS can change every minute of every business day.  They've been doing just that for months as market anticipation for the Fed rate cut has increased.  Simply put, the Fed rate cut has long since had its impact on the financial market and today merely saw a very small epilogue to that bigger story.
If you want to think about this in terms of the stock market, just consider that stocks LOST ground today.  Why would they do that if a Fed rate cut is universally considered to be positive for stocks?  Here again, stocks have already had plenty of time to PRICE-IN the rate cut.  That left today for them to react to other information from the Fed.  Specifically, they were a bit disappointed that Powell didn't do more to offer assurances about additional cuts.

The bottom line is that when financial instruments (like stocks, bonds, and MBS) can move all day every day, it would be foolish of them NOT to move in anticipation of something that will almost certainly happen.  That was the case with today's Fed rate cut.  In fact, they have already accounted for at least one more cut. 
That means, all other things being equal, if the Fed were to say "we're done cutting for now and will keep rates at these levels for the next 6 months," you'd see an immediate and rather large move higher in rates.  In other words, we're already counting on another 1-2 Fed rate cuts simply to sustain the low rates that are already here.  If those cuts don't come, rates will move back up.

Twin Cities Market Snapshot
Twin Cities Market Snapshot

The order of the day is market balance between buyer and seller interests. While true that there may not be as many homes for sale to choose from and that prices are on the high end for the average first-time home buyer, there are considerations for sellers as well. Such as, more markets are swinging toward the back side of balance with fewer sales leading to some amount of downward price pressure from a beleaguered buyer core that is becoming less willing to overreach.
In the Twin Cities region:
• New Listings decreased 16.0% to 1,006
• Pending Sales increased 11.5% to 1,187
• Inventory increased to 12,074


-Mpls Area Association of Realtors

Lending Rates Are LOW!!
Lending Rates Are LOW!!

For the seventh time in the last nine weeks, the 30-year fixed-rate mortgage dropped, reaching the lowest
average since November 2016, Freddie Mac reports in its weekly mortgage market survey.

Twin Cities Housing Market Sets Record for Median Sales Price!
Twin Cities Housing Market Sets Record for Median Sales Price!

According to MAR, MN Association of Realtors, the Twin Cities set a new single-month record for the median sales price of a single-family home in March, even as above-average precipitation and soggy basements contributed to slower sales.

The median sales price hit $275,000 in March, the highest on record for the Twin Cities in any month and an increase of 6.5 percent over March 2018, according to data released Thursday by the industry association Minneapolis Area Realtors. MAR suggests wet weather and melting snow may have played a role in both closings and listings declining in March from the same time a year earlier; sellers listed 8.8 percent fewer homes for sale compared to March 2018, while buyers closed on 9.3 percent fewer homes than a year ago.

The inventory homes for sale is still low at just 1.8 months, well below the four to six months of supply most consider the sign of a healthy, balanced market. But there are signs that the market’s pendulum is starting to swing in favor of buyers.

-By Dylan Thomas, Staff reporter, Minneapolis / St. Paul Business Journal
 Apr 18, 2019, 12:24pm EDT

Everything You Need to Know About Minneapolis' Upper Harbor Terminal Project — And What Happens Next
Everything You Need to Know About Minneapolis' Upper Harbor Terminal Project — And What Happens Next
Everything You Need to Know About Minneapolis' Upper Harbor Terminal Project — And What Happens Next

The massive plan to turn 48 acres of riverfront land into housing, businesses and an outdoor performance venue was approved Friday.

The Minneapolis City Council voted to approve a massive plan to turn 48 acres of riverfront land into housing, businesses and an outdoor performance venue. The project — the Upper Harbor Terminal — is city officials’ No. 1 construction priority right now.

The plan lays out preliminary designs for the land between the Mississippi River and Interstate 94 in north Minneapolis that once served as a barge shipping terminal. Federal authorities closed the terminal to avoid the spread of invasive carp in 2014, and the city of Minneapolis has been studying what to do with the T-shaped piece of property since.

Renting vs Buying
Renting vs Buying

• Historically, the choice between renting or buying a home has been a tough decision.
• Looking at the percentage of income needed to rent a median-priced home today (28.4%) vs.
 the percentage needed to buy a median-priced home (17.5%), the choice becomes obvious.
• Every market is different. Before you renew your lease again, find out if you can put your housing costs to work by buying this year!

Making Dreams Come True in 2017!
Making Dreams Come True in 2017!

Just some of the properties I've sold in 2017! Looking forward to 2018! Contact me if you're thinking of listing your home or purchasing your next one! I can help!