Condo development scarce outside Miami, New York

Residential condominium development is robust in such cities as Miami and New York, but in the rest of the country, new condos are scarce.

Condo construction comprised 5.5 percent of total U.S. multifamily construction in the first quarter. It was the smallest such percentage since the Commerce Department started following construction data in 1974 and well under the average of 24 percent.

The national data obscure regional differences.

In Miami and New York, condo markets have staged strong rebounds, largely because they attract wealthy foreign buyers who can cover most of a condo’s price with cash.

In the rest of the United States, condo construction aimed more at middle- and lower-income buyers has dropped off.

Resale price increases for single-family home are outpacing those for condos.

In May, the median resale price of a condo was $216,400, or $15,000 below its June 2005 peak prior to the housing market downturn in the late 2000s, while the median resale price of a single-family home was $230,000, just $600 below its July 2006 peak prior to the downturn.

From 2008 to 2012, the Federal Housing Administration (FHA), which backs mortgage loans to buyers with little wealth, toughened it standards for lenders.

For example, FHA no longer insures mortgages secured by units in a condo building unless at least half of the units are occupied by owners.

Nor will FHA insure units in a condo building under construction unless a minimum of 30 percent of the units are under contract to be sold. [Wall Street Journal] – Mike Seemuth