Correction: An earlier version of this article misquoted Katie Wethman of Keller Williams Realty in McLean as saying she had not had any condo buyers over the past two years. Wethman said that in condo buildings with high rental ratios, the difficulty of obtaining financing has made it very difficult for buyers to make purchases over the past two years. This version has been corrected.

Trendy neighborhoods in the District and close-in suburbs might be blossoming, but if you’re trying to resell your condominium apartment in much of the Washington area, you’ll probably find it to be another chilly spring.

There is activity, but some of it bears the mark of scavengers. Real estate agents say investors — and some buyers’ parents — are paying cash to snag deals at depressed prices. Investors are searching for diamonds in the rough in hot markets as well as in areas more burdened by foreclosures and short sales.

Suzanne Des Marais, president of the D.C. Association of Realtors and an associate broker with Urban Pace, said all-cash purchases are occurring more often. “In the last six months, I’ve had two deals where parents paid all-cash for their children’s units,” she said. But the all-cash deals are one sign of how difficult it is for buyers to get mortgage approval for a condominium.

Agent Katie Wethman of Keller Williams Realty in McLean said lenders’ restrictions and confusion over federal mortgage programs have affected the market. In condo buildings with high rental ratios, the difficulty of obtaining financing has made it very difficult for buyers to make purchases over the past two years, she said in mid-March.

Scars from the recession

A legal glitch at the Federal Housing Administration this year scuttled some sales. Since the housing collapse, the FHA has worked to tighten its rules, moving in 2009 to a process that requires that condo buildings meet certain standards before it will approve a low-cost loan for individual buyers.

Some condo associations quickly got approval, but so many missed a December deadline — about 25,000 nationwide — that the FHA changed to rolling deadlines this year. But, from about February to mid-March, the FHA put a hold on all building approvals while it untangled a legal glitch in the approval process that had some buildings getting certification while similar buildings were rejected.

The interruption killed some condo deals, said Andrew Fortin, vice president for government and public affairs at the Community Associations Institute, which represents condo and homeowner associations. Buyers who couldn’t get FHA loans because a building was rejected or put on hold “won’t be coming back to that unit,” Fortin said. “It’s too late for that seller.”

The FHA’s formal rule-making on building approvals will be done this year, FHA officials said. However, Fortin’s group maintains that the FHA process and its rules are “causing confusion” and harming the market even though the agency’s intent — to protect against the loose lending that led to the housing market’s fall — was “understandable.”

The rules imposed by the FHA and Fannie Mae and Freddie Mac are critical because the three agencies represent about 90 percent of home lending after private lenders ran from the market. Private lenders now routinely require 20 to 50 percent down payments, plus strong credit scores. The FHA requires only 3.5 percent down.

The FHA’s rules are a challenge for some buildings. It requires that no more than half of a condo building’s units can be rented out and no more than 25 percent of the space can be commercial — a problem for new buildings with ground-floor retail. Condo buildings also can be rejected because of insufficient reserves; significant pending litigation; bankruptcy/receivership or other types of financial issues; and insufficient fidelity bond insurance coverage.

Although some buildings are proceeding to certification after the embargo was lifted, those in the Washington area with too many renters face compounded problems under the FHA rules, said Joanne Darling, president of the Prince George’s County Association of Realtors. “If people can’t sell, they’re renting them out,” she said. That further boosts the percentage of renters, exacerbating the problem.

The situation for sellers is “just awful,” said Ellen Krouss, a potential seller who has been working with Wethman. Krouss has been waiting a year to list her Kalorama condo because of the uncertainty over the FHA rules and her fear that her building has too many renters to win FHA approval.

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.

Green shoots

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.

During the 12-month period that ended March 31, the sales volume of new condos throughout the region was one-third lower than a year earlier, according to Delta Associates. Delta blames some of the decrease on a shortage of desirable units in locations that appeal to buyers.

But sales of new units have been strong enough in parts of Arlington County, Bethesda and downtown Washington that at least two larger-scale projects are going up — the JBG and Grosvenor’s 125-unit upscale District Condos on 14th Street NW and Jim Abdo’s 117-unit luxury Gaslight Square in Rosslyn. Confidence in Arlington has also led JBG to finally convert into condos the Myerton on South Courthouse Road, a rental building that it purchased in 2006 with the intent of taking condo but couldn’t because of the housing downturn.

Abdo said high-end demand is so strong for the Rosslyn area that his Gaslight Square is the “only project underwritten [by its lenders] exclusively as a condo project” rather than as one that could be switched to apartments if needed. The confidence was justified, he said: At a private opening party in late February, “we had 165 RSVPs, 150 in attendance on a freezing cold February day, and we sold $12 million worth of condos — about seven of the 10 penthouses in the first building.” The average price was $1.3 million.

Prices have varied greatly by location. Across the Washington area new condo prices declined 1.7 percent in the 12 months ending March 31, Delta Associates said. They were up 3.6 percent in the popular central-D.C. market , defined as Dupont and Logan circles, the West End, Chinatown, Mount Vernon Square and Mount Vernon Triangle.

But prices fell 8.3 percent in Prince George’s County, mainly because of price cuts at National Harbor. Price reductions at the Turnberry Tower luxury condo in Arlington helped pull down prices 4.4 percent in the Arlington/Alexandria market, Delta said.

For resale condos, prices in the Washington area have fallen 8.7 percent since February 2010, Delta said. Although prices rose in the District, Arlington and Loudoun, foreclosures have dragged them down 8.5 percent in Northern Virginia and 26.2 percent in the Maryland suburbs.

Michael Darby, principal and co-founder of Monument Realty, cautions against too much optimism. The District “condo market is still slow,” he said. “People are pretty nervous about buying because of the down payment needed, and there’s just not as many people buying as there once was, and no speculators looking to get [fast] appreciation” in resales.

Darby predicts that it “may be a year or so for the market to pick up” and for “rents to get to the point where people get uncomfortable [paying so much] and want to be owners instead.” He notes, though, that for a $300,000 unit, the down payment required by many lenders is steep — $60,000, “and not that many people renting have $60,000 sitting around.”

Agents and developers are watching closely to see what Miami-based condo converter Crescent Heights does with the Palatine apartment tower in Arlington that it bought at a foreclosure auction in March 2010 for $118 million. Monument Realty built the 216-unit property in 2008 to be condos but converted it to rentals midway through selling when the market collapsed.

Still, condo sellers never know who might be interested in buying. Frank Rizzo, who was working with Murphy to sell his one-bedroom condo in Foggy Bottom, found an unexpected buyer this year when he told his tenant that he would need to show the unit. Instead of opening it for showings, she decided to buy it — for cash. The deal closed March 4. “It was virtually effortless,” Rizzo said.