When some trend that negatively affects the real estate industry makes national news, it often turns out that Vero Beach is not affected – our community is still such a desirable destination that real estate values are holding steady in our “micro-market,” despite headwinds elsewhere.
That appears to be the case with the latest scare, a story in last week’s Wall Street Journal that said many condominium units across the country had basically become “unsaleable” because prospective buyers can’t find anyone to offer them a mortgage because of a “secret blacklist” by Fannie Mae, the national mortgage backer and guarantor. That would limit condo sellers to dealing with prospective buyers able to make cash offers only.
Condo complexes allegedly land on such a blacklist if Fannie Mae doesn’t think the Home Owners Association carries enough insurance or has enough reserves on hand to make needed repairs, especially in the wake of the 2021 Surfside condo collapse that killed 98 people and the Florida state law that mandated structural inspections for buildings three stories and higher close to any shoreline.
The Wall Street Journal article said Florida tops the blacklist with 1,400 properties, followed by California, Hawaii and Texas. The article mentioned examples in California, which has its own insurance crisis because of persistent wildfires, and in Texas, but none in Florida.
However, local realtors and mortgage lenders as well as HOA executives say they know of no cases in our areas where condo sales could not be consummated because of any blacklist, and they said they doubted any Vero Beach condos are on such a list.
“That’s an attention-grabbing headline word, but I haven’t seen any such blacklist here,” said one leading real estate agent.
At last count, Realtor.com listed about 250 condominium units for sale in the 32963 ZIP code area, a number that has increased in the past year but is still below pre-pandemic numbers, and “time on the market” is also within normal ranges. Sale prices mostly show the normal adjustments between asking prices and selling prices because of buyer-seller negotiations, but the bottom has not dropped out of the asking prices for condos.
The only condos that are probably unsaleable at the moment in the Vero Beach area are those in the Bayou East and West complexes on the shore of the Indian River Lagoon adjacent to the Quail Valey River Club that were extensively damaged in the tornado spawned by Hurricane Milton last November and are now undergoing repairs. But that is a special case because of the tornado, said mortgage lender Vin Biscoglio, who has offices in Vero Beach and Jupiter.
Biscoglio says he thinks that the mortgage approval process for condo sales in our area is proceeding normally. He explained that mortgage approvals for condos are always slightly different from single-family home sales because the mortgage lender doesn’t only approve the buyer’s creditworthiness but also must approve the entre complex to make sure it carries enough insurance for the whole building and has enough reserves on hand to make needed repairs.
“An individual buyer for a home may get a limited review, but a condo buyer will have a full condo review for the whole property,” he explained. “It may be a little more strict now, but it was always something that was looked at.”
Biscoglio added that even there, Vero Beach is in a uniquely favorable position because if national mortgage lenders balk for some reason, “we do have a couple of local banks that will still offer a mortgage.”
The Federal Housing Administration of the U.S. Department of Housing and Urban Development (HUD) maintains a list of condo complexes approved for mortgages and no complexes have been outright rejected in Vero Beach. Some complexes may be listed as having their approval rating “expired” because they did not submit required documentation on time, but such listings may be misleading, Biscoglio explained, because they may not be an indication of any real problems.
“I don’t know of any condo mortgage applications in the Vero Beach area that we haven’t gotten approved,” Biscoglio said. “We’re in a good space in Vero.” He added that local HOAs have generally done a good job allocating enough funds in reserves for needed future repairs, unlike the situation in Surfside, where successive condo boards kept kicking the can for repairs down the road.
