Federal Housing Administration Commissioner Brian Montgomery said that the agency will be finalizing new condo policies—long-awaited by the real estate industry–that could lift some restrictions and streamline processes to give a boost to the condo sector. Montgomery said that condos represent an opportunity to help boost affordable housing for first-time homeowners and seniors.
“We anticipate that the updated regulations will be more flexible, less prescriptive, and more reflective of the current market than existing provisions,” Montgomery told a crowd during last week’s 2019 REALTORS® Legislative Meetings & Trade Expo in Washington, D.C. “It may also include single-unit approvals for loans that meet HUD standards for unapproved projects, allowing HUD to set the specific percentage.”
A final rule is currently under review by the Office of Management and Budget.
The National Association of REALTORS® has supported revisions to the FHA’s current condo policies, including allowing owner-occupancy level determination on a case-by-case basis, granting up to 45% commercial space without documentation, and including a five-year approval period for project certification.
The FHA issued proposed changes to its condo rules in 2016 to lift several restrictions within the sector. However, the proposed rules were never finalized. Last year, 174 members of Congress signed a letter to Department of Housing and Urban Development Secretary Ben Carson urging him to approve a proposal, a call that has grown louder by other housing groups over the year.
“Affordability is an enormous challenge in many markets across the country,” Montgomery acknowledged during the conference. “Large constraints on the housing market by regulations have exacerbated the shortage for hard-working families who are employed and willing to buy but continue to be priced out. The good news is that in today’s economy we have job growth, low unemployment, and wage gains that have provided an additional shot in the arm.”
Montgomery pointed to overregulation and zoning laws as contributing to housing affordability and accessibility issues.
“The combination of regulatory overreach and an aging housing stock has meant not enough affordable units are left—or, worse, being built,” Montgomery said. “Zoning, environmental, and sometimes labor restrictions have made it more difficult for areas across the country to meet the growing [housing] demand. We will need continued wage and economic growth and regulatory reform to mitigate affordability constraints. This will also require that not just HUD but states and localities ease the regulatory burden and other impediments to development.”
National Association of REALTORS®