She bought the one-bedroom unit in 2007 but got married last April and needs more space. “I would like to move out, but I don’t want to rent because I don’t want to be a landlord and because it would enable the problem” the building already has with excessive renters, she says. Last month, Wethman was looking into the possibility that a private lender might be willing to keep any loan offered for the unit in its portfolio, rather than selling it to Fannie or Freddie, eliminating the need to comply with a ceiling on renters.
The FHA cap on renters is particularly problematic in Foggy Bottom, says Long & Foster agent Tom Murphy, because “about 20 percent of the owners are job holders in organizations that rotate postings. They work for the State Department, the World Bank, or they’re university professors who go on sabbatical. . . . Once they walk out the door, they’re investors.”
Fourteen of 20 high-rise buildings in Foggy Bottom have too many renters to qualify for the FHA, Murphy estimates. He says some Dupont Circle buildings also can’t get certification.
The FHA restrictions also limit the percentage of owners who can be more than 30 days delinquent on condo fees. But if sellers can’t sell and can’t find enough income to pay their condo dues, the buildings will flunk that FHA test, too, agents noted.
“The biggest problem we have is delinquencies,” said Stephen Bupp, president of CVI, a property management company in Columbia. CVI manages 24 communities in Prince George’s and Howard counties with 10,500 homes, about half of which are condos. “The amount [of money owed in dues] is staggering, compared to all previous years” since he started business in 1975, Bupp says. He noted that all of his buildings have FHA approval.
To encourage payment of condo fees, the CVI-managed associations prohibit delinquent owners from parking from midnight to 7 a.m. “That has made a lot of people pay their monthly assessment,” Bupp said.
A recent analysis by research firm Delta Associates, based in Alexandria, shows how markedly different neighborhoods in the Washington area can be. Although Delta said there is 2.1 years worth of new inventory on the market throughout the Washington area, given the sales pace, the supply ranges from just six months in central D.C. to 4.2 years in Montgomery County. The Loudoun and Prince William county area has the second-greatest supply, at 2.6 years.