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NEW YORK - FEBRUARY 17: An "Immediate Occupancy" sign is seen as construction continues on the waterfront Northside Piers luxury condominiums by U.S. homebuilder Toll Brothers Inc. February 17, 2009 in the Brooklyn borough of New York City. Toll Brothers has slashed prices on the condos by as much as 37 percent following a housing downturn in the New York metropolitan area. Brooklyn apartment prices fell 7.4. percent in the fourth quarter while Manhattan apartment sales tumbled 9.4. percent over the same period. (Photo by Mario Tama/Getty Images)
The federal government may soon come to the rescue of stalled luxury condominiums in Manhattan.
Manhattan luxury condominiums known for posh amenities and high price tags are beginning to apply for Federal Housing Administration backing.
Condominium developers hope to open financing opportunities for their purchasers as well as guarantee a little protection for themselves. Not only will lending institutions be more willing to lend to purchasers with FHA backing, but the FHA will pay the mortgage should a home buyer default.
The administration recently agreed to insure mortgages for apartments at the 98-unit Gramercy Park development, known as Tempo in Match, according to Bloomberg. That deal allowed buyers to make a down payment of as low as 3.5 percent in a complex where apartments run up to $3 million.
The U.S. Department of Housing and Urban Development relaxed its financing rules in December, allowing the FHA to insure loans on new developments where only 30 percent of the rental units are in contract instead of 50 percent.
The administration can insure loans up to $730,000, which allows home buyers to borrow up to 97 percent of the asking price. But the effectiveness of this approach may be of limited use in Manhattan. Unlike other parts of the city where FHA backing has spurned purchases, the average price of a condo is around $1.5 million, Miller Samuel and Prudential Douglas Elliman told Bloomberg.
“Something has to happen for this product to be marketable,” Jonathan Miller said told Bloomberg. “I just find the whole thing ironic that FHA is providing financing for luxury housing.”