Just to the west of the Adrienne Arscht Center is Canvas, a 513 unit condo development that is being built as “affordable luxury” to attract the local buyers who are hungry to participate in Miami’s new condo boom. The site work has begun and over half of the residences are currently under contract.
In order to attract more of the 30-45 year old local buyers, they have also received their Fannie Mae Approval, making mortgages easier to obtain once the development is complete. What this means to buyers is that Fannie Mae is willing to purchase or securitize the mortgages people take out on individual apartments in the development. When a project is Fannie Mae Approved, banks are more willing to issue mortgages to buyers at lower rates and with lower down payments. This is excellent news for local buyers, who are typically priced out of the new condo market due to competition with foreign cash investors.
Because the approval process is so scrutinizing, the approval should be seen as a gold star for any development that obtains one. Of all the condo developments in the Greater Downtown Area (the general area between Brickell and the Design District, east of I95 and west of the Biscayne Bay), Canvas is one of only 6 developments with the approval. Fannie Mae has reviewed the specifications of the project and is pleased with the budget, insurance and legal documents associated with the building. Developments who have the approval are seen as “safer” investments as the buildings are well-run.
Locals have been especially excited about this development because of the quality of finishes/amenities offered, the anticipated restaurant by Kevin Aoki (son of Benihana founder Rocky Aoki and brother of recording artist Steve Aoki) as well as the addition of a new recording studio to the area.
Canvas is still offering new condos with price ranges from the mid $300’s-$600’s and floor plans from one bedrooms up to three bedrooms. The tower will be 37 stories and is expected to be completed in 2017. Groundbreaking is scheduled for next month.
See below for additional renderings just released from the developer:
Building Entry
Lobby
Lobby
Yoga Area
Pool Area at Dusk
Social Area/Bar
Rooftop Dining
Amenity Area
Fitness Center
Kids’ Playroom
Kitchen
Living Room
Bedroom with view
Master Bath
HUD Promises Easier FHA Financing for Condos
For years we have seen hopeful condo buyers, armed with pre-approval letters become frustrated with the financing process and give up or learn that their pre-approval letters are only valid in certain condo developments. The reality is that in order to purchase a condo, two approvals must happen.
First, the buyer must prove financially able to commit to the mortgage payment by submitting their credit and income details to the bank for review. Secondly, the condo development they wish to purchase in must also be approved by the financial institution.
FHA loans are very popular among buyers because of their less stringent qualification guidelines and because of the lower down payment requirements. In order for a building to become FHA approved, they must submit an application to the US Department of Housing and Urban Development (HUD), pay an application fee, and wait for 60-90 days for an answer. The application is long and cumbersome, the fee is high, and few buildings are approved. This has led to a diminishing number of buildings who are even willing to try for the approval.
For example, the current 95 page application has been submitted by 48 buildings in Miami Beach & Downtown Miami. Of those 48, only 2 buildings meet all of the criteria and have been awarded FHA approval.
If you are a buyer today with an FHA pre-approval, you would be able to purchase a condo in Brickell on the River North or Brickell on the River South. This remains to be the case no matter what your credit score is, how secure and high paying your job may be or how responsible you are. Those would be the two buildings you could choose from. You would be able to use the pre-approval letter to purchase a house, but those are the only two condo buildings that allow FHA mortgages currently.
At this year’s NAR conference in San Diego, an announcement was made by the Federal Housing Administration that changes are underway to the approval guidelines, making FHA mortgage more accessible to condo buyers going forward. Among these changes are restrictions on owner occupancy versus investor owners, commercial space percentage, FHA concentration and spot approvals. We commend NAR and HUD for their efforts in making home ownership more accessible and look forward to seeing the specifics of the changes.
In the meantime, if you are a condo buyer who prefers a lower down payment, there are loan programs in some buildings that allow for less than the standard 20% down payment and are happy to answer questions you may have about financing in condos.
Paramount Bay Granted Fannie Mae Approval
Sales haven’t quite yet begun at Paramount Bay but the development was granted Fannie Mae approval last week. The conditional approval expires on September 25, 2011 which leads me to believe that we should expect sales to launch very soon. Paramount Bay, located in the Arts District of Miami at 2066 North Bayshore Drive, was developed by Royal Palm Communities and completed in 2009. The construction loan was originally held by Corus Bank which was later seized by the FDIC on September 11, 2009. Starwood Capital Group then acquired Corus’ real estate assets on October 2, 2009 by beating seven groups with a winning bid of $554 million. Paramount Bay was one of three condo developments residing in Miami that were part of the real estate portfolio acquired in that auction. Personally, I’m very excited about Paramount Bay and can’t wait to tour it again. I toured Paramount Bay in 2009 but the building wasn’t quite ready and I hear that Starwood has invested lots of additional money into the building over the past three months to really blow everyone away. No word yet on what pricing will be like but I’m expecting it to be close to that of 900 Biscayne Bay.
Marina Blue Receives Fannie Mae Approval
On April 20, 2010, Marina Blue received a letter from Fannie Mae stating that the building has been accepted under Fannie Mae’s Special Approval Designation for twelve months. Qualified buyers will now be able to obtain financing using a Fannie Mae conventional loan.
Potential buyers may want to take a look at unit 2203 at Marina Blue. It’s a 1 bedroom + den/1.5 bath condo with 943 square feet of interior, 9-foot ceilings and a balcony that stretches the length of the unit. The condo offers views of Biscayne Bay, Key Biscayne, the Miami Beach skyline and Downtown Miami. At an asking price of $300,000, it is being offered at the lowest price per square foot of any 1 bedroom condo at Marina Blue currently active in the MLS. Take a look at the video tour below.
The Mark on Brickell Granted Special Approval Designation by Fannie Mae
I was notified earlier this week that The Mark on Brickell was granted the Special Approval Designation by Fannie Mae. This news hasn’t been disclosed on the Fannie Mae website yet but the information has been confirmed. It should appear on the site this upcoming Monday when their next update is released. It will now be possible for qualified buyers to obtain a conventional loan for condos at The Mark on Brickell.
The Mark on Brickell recently completed the installation of a seawall between the building and the bay that cost nearly $500,000. This expense, however, is expected to save the association hundreds of thousands of dollars in insurance every year.
Currently, inventory at The Mark on Brickell is rather light. The 22 listings for sale in the MLS represent just slightly over 6 percent of the total number of units in the building. 11 total units have closed at The Mark on Brickell within the past six months. Furthermore, there are currently 10 pending sales in the MLS. These sales figures should only get better now that the building is Fannie Mae approved. For those who are curious, there are currently just 10 units available for rent at The Mark on Brickell in the MLS. That represents slightly less than 3 percent of the total number of units in the building.
I plan to release overall inventory figures for Miami-Dade County next week. I fully expect the data to show a significant improvement since the last time I provided an update in July 2009.
1800 Club and Neo Vertika Now FHA Approved
This news came across my desk yesterday afternoon and I was quite surprised. I verified the information on the U.S. Department of Housing and Urban Development (HUD) website. It appears that Neo Vertika received its FHA approval on February 2, 2010 and 1800 Club received theirs on March 18, 2010. Down payment requirements for qualified buyers on an FHA loan can be as low as 3.5 percent of the purchase price. FHA loans typically come with additional costs but credit standards are usually less stringent than those of a conventional loan.
Fannie Mae Special Approval Designation – Updated
Fannie Mae has updated its list of condo buildings which have received the Special Approval Designation. The special designation makes it possible to obtain financing for condos in these buildings. The following three well known developments have been added to the list:
Earlier this afternoon, Fannie Mae made the announcement that it will reassess hundreds of condominium projects throughout the state in an effort to jump-start the market. The news is a godsend to a condo market that was heavily supported by cash buyers in 2009.
Here are some excerpts regarding the announcement from PR Newswire and Reuters:
PR Newswire
Fannie Mae announced today that it is undertaking a comprehensive review of hundreds of condominium projects in the state of Florida in an effort to allow additional projects to become Fannie Mae-eligible through a new “Special Approval” designation.
A dedicated team of six Fannie Mae professionals based in Florida is conducting a thorough examination of condominium projects across the state that may not currently meet Fannie Mae’s standard eligibility criteria and assessing specific criteria more closely, including occupancy, homeownership association dues, financial stability of the project and property condition. Projects deemed to be sufficiently stable following the closer examination are granted a Special Approval designation, meaning lenders can originate and deliver mortgage loans secured by units in these projects to Fannie Mae
Fannie Mae, the largest funder of U.S. home mortgages, on Thursday said it is making it easier for some Florida condo buyers to qualify for loans in a bid to stabilize one of the worst-hit real estate markets.
The housing finance giant said it is reassessing hundreds of Florida condo projects to see if they are “sufficiently stable” enough to qualify for funding, even if they don’t meet current requirements, Fannie Mae said in a statement.
These projects would get a “special approval” designation from Fannie Mae, clearing the way for hamstrung Florida lenders to originate loans and help spur a recovery, it said.
Fannie Mae Approved Condo Buildings in Florida
As of June 1, 2009, Fannie Mae updated their website to reflect the condo developments in Florida that are now approved for financing.
The following is a list of recent condo developments in South Florida that are now Fannie Mae approved:
Brickell on the River South Receives Approval From Fannie Mae
As of yesterday, Brickell on the River South became a Fannie Mae approved development. As a result, creditworthy buyers will now be able to acquire financing. This should help Brickell on the River South to bolster sales of its remaining lofts. 1 bedroom lofts start at $180,000 while 2 bedrooms start at $272,000.
I know of a few other condo developments in Brickell that have applied for Fannie Mae approval and should be receiving approval soon. A lack of financing for new condos in Miami has hindered sales drastically since the new Fannie Mae guidelines went into effect in January. It’ll be nice to finally see financing back in play once more condo developments have been reviewed and approved.
