We’re all hearing how now is a great time to buy.  Interest rates are at historic lows, there are some great opportunities in the market and it’s cheaper to buy than rent right now in the DMV (DC, MD and VA for you newbies!)

Condos are a great entry point for new home buyers.   They typically don’t require as much maintenance  as a home and they’re a natural progression from renting an apartment.  And with a loan through the Federal Housing Administration (FHA) you can get in one for a low down payment of 3.5%.

But before you invest a lot of time, energy and money in pursuing a condo you should know that FHA has implemented some new financial rules that make it more difficult to get financing in one of these buildings.

FHA requires that a building be certified and in their system in order for you to get a loan on your purchase.  Many buildings are already certified however many are also due for recertification.  Have your realtor confirm their standing prior to you submitting an offer if you’re going FHA. 

If they’re not on the list many lenders can submit a certification package or if it is up for recertification the condo association is probably already working on that step.  It is at this point that you may run into problems.  FHA rules require that condo project budgets, insurance and financials be in order.  One aspect of this is causing problems.

If more than 15% of owners are 30-days behind on their condo fees, then lenders cannot fund on the project without waivers from FHA.  In a 4-unit building if only one person is behind then that 25%. 

Other issues that will be important to know: 

1.       What is the investor ratio?  Can’t be over 50%

2.       How are the condo reserves? Funds must be set aside each year to fund long term maintenance

3.       With new condo projects at least 30% have to be sold

These are problems that can be found out prior to you investing money on an appraisal, inspection or most importantly your time.  Do your research or better yet, ask your realtor to do it for you.

September 27’s Washington Post’s “Where We Live” section provided some real estate trends for condos.  The data compared the first three months of 2007 to the first three months of 2008.

As one would expect, metro-wide sales were down from 4,556 condos to 2,864 condos during the January to March period. Pricing held up well, however, with the median purchase price of $277,222 in 2007 compared to $274,175 in 2008, or a 1 percent decline in value.

But the District itself saw a much brighter picture.  Sales increased from 208 to 312 when comparing the two periods, and pricing went from $330,000 in 2007 to $379,500 in 2008 – a 15 percent increase!

Now, keep in mind that this is only a small snippet of the market, and one cannot draw meaningful conclusions from the data.  That being said, it is just another data point that supports the notion that living in the District has its advantages!

One weekend this spring I was surprised to see that The Cavendish (a condo building at 1200 Arlington Ridge Road, Arlington, VA) has outlawed the use of open house signs.

Open houses are an important part of the home-sale process and with no signage it becomes impossible to direct potential buyers to the unit. This speaks to an interesting movement by condo associations to restrict—or outright prohibit—the use of for sale and open-house signs on the property grounds.

The argument is that open houses are a security risk to the building and that signs clutter the grounds. And supposedly these factors depress the values of the condos.

While I agree that large for sale signs constantly in and out of the front yard of condo buildings can be tacky, banning the use of open house signs does not help the owners of units in the building. These restrictions hinder the agents’ ability of the agent to do his or her job, which in turn can lead to lower sale prices—for all owners