The Steamboat Springs condo market is one of the more challenging market segments for Steamboat real estate sales and the Colorado resort market in general. There have been 34 Steamboat condominiums that sold in 2010 although we’ll have to see some changes in financing availability before the Steamboat condo market fully improves. Financing for condos is available, just more challenging.
The Law of Unintended Consequences definitely affected the Steamboat condo market when our lawmakers tried to clean up the problems from the recent lending free-for-all.
Here are some of the new Fannie Mae/ Freddie Mac/ major lender requirements that make it challenging to finance a Steamboat condo:
- Require 70% owner occupancy.
- Do not allow nightly rentals of condos.
- Do not allow front desks.
- Allow underwriters to do a web-based internet search to determine whether project engages in nightly rentals. These searches can include inaccurate or dated information that are not verified.
- Restrict lending for projects that do not have individual gas or electric meters or services.
- Do not allow lending in projects where “lodge” is included in the name.
- Require 40-50% down payment.
So Steamboat sellers got creative to meet the new rules. For example, Bear Lodge at Trappeurs Crossing took out their front desk to open up financing opportunities. Sunray Meadows changed their bylaws so that nightly rentals are no longer allowed and has seen plenty of short sales close. Also, some lenders will hold the loans in their portfolios and only require 25-30% down.
The #1 thing to remember if you are financing is to use a good local Steamboat lender who knows how to get these loans done. The Steamboat resort market–and any resort second home market– is different. Don’t use your favorite lender from back home–they have no idea how resort markets work.
If you are thinking about purchasing a Steamboat condo, remember that there are owners who will carry the financing for qualified buyers. It’s a win-win for buyers and sellers and a way to avoid the traditional financing methods that remain so troublesome. Please contact us for information on which condos offer seller financing.
Until then, there is a lot of interest from cash buyers. Cash buyers made up almost half of the Steamboat condo sales in 2010. Cash buyers paid an average of 85% of list price for Steamboat condos in 2010 while buyers who financed paid an average of 98% of list price. (There are more reasons other than cash vs. financing for the difference in the list-to-sold price. Let us know if you are interested in specific developments or price points and we’ll get you details.)