Recently I wrote this about the condo market in Denver:
There has been a lot of news – mostly bad – in regards to the Denver condo market. Even though it comprises a significant segment of the Denver homeownership population, condos have been taking a beating, both literally and figuratively, from banks, the FHA, careless tenants and appraisers.
For the most part, that’s still true. For instance, I have two condo listings in hip parts of town that are going to be tough to sell to a buyer who needs FHA-type financing, i.e., low down payment. The first is at Baker Commons on Broadway, 277 Broadway, to be exact. It was under contract in a day last year, but the buyer couldn’t secure financing in any way, shape or form, because she used lenders that didn’t understand condo reviews or the new FHA guidelines. It’s a great top-floor, west-facing condo for only $200,000 in the hippest part of Denver.
The second unit is at the Silver State Lofts building, at 2441 Broadway. This is going on the market next week (pictures and video to come). The problem is that this unit, which is going on the market for $235,000 (includes parking and storage) is going to face significant scrutiny from any lender trying to give money to a buyer with less-than-stellar credit and less-than-stellar cashflow.
It’s easy to blame HOAs and management companies for not enforcing – actually writing! – rules that prohibit changing more than 40% of a building into rental/investment property, and for sleeping at the wheel in terms of keeping their FHA status when they do meet the criteria. The reality is that rarely do condo buyers think ahead about their exit strategy if they do need to sell.
You can sell your condo in Denver, but in most cases, it’ll be to the cream of the borrowing crop or cash buyers. And, in these cases, these guys are looking to rent their new investment anyway.
Maybe it’s the start of a new trend of “de-condoizing” buildings back into multi-family apartment buildings.
Karl Lueders is a residential Realtor with The Kentwood Company at Cherry Creek. He can be reached at 720.971.8267, email, Twitter or G+.