Lisa Dunn of Realty One Group in Mission Viejo takes the blame for single-handedly killing condominium property values in a small neighborhood in Rancho Santa Margarita.
She was the agent representing the sellers of a condo in the community that was listed at market rate. But the homeowners association’s Federal Housing Authority certification expired in July.
That all but eliminated first-time buyers and others who must get FHA-backed loans to qualify to purchase property — in other words, it left that development out of consideration for most buyers in the market for a condo in the community southeast of Irvine.
“This tract was not FHA-approved,” she said. “I didn’t get any offers. Not one.”
So Dunn lopped off a chunk of the asking price for the two-bedroom, two-bath, two-car garage condo, taking it down from $264,900 to $224,900.
Because she slashed the price to generate offers, it reduced listing prices for similar condos in the entire neighborhood, as asking prices are based on nearby comparable listings and sales.
“It effectively killed the value of a neighborhood, where I know properties are more valuable than that,” Dunn said.
With the housing market far from out of the woods, the troubles of homeowners associations in Orange County, and across the nation, may be worsening, compounded by new, stricter FHA guidelines.
In fact, such associations are being impacted from all sides, those familiar with such properties say.
Foreclosures have reduced occupancy rates at these associations — one of the standards by which FHA and lenders use to decide whether to lend to buyers in such developments.
The holes in occupancy in turn leave gaps in an associations’ reserves — another standard by which FHA and lenders use to judge whether to give a loan for someone purchasing in such a development. Add to the reserve issues the growing number of condo owners who are in trouble on their mortgages, and have placed paying HOA dues last on their to-do lists.
And those who are in trouble on their mortgages constitute delinquent homeowners, another black mark against an association in the eyes of FHA and lenders.
This rising tide of troubles has left associations with too many whammies against them to count.
The problems faced by these associations began worsening noticeably during the summer and have continued to get worse, said Dunn, who has seen hundreds of HOAs in Orange County lose their FHA financing certifications.
See JERGLER, page C33
