It is a landmark day for ACG Equities, the investor who purchased the 5th & Main project from Wells Fargo Bank in March of 2011: The U.S. Department of Housing and Urban Development has granted the project FHA approval.
Significance of FHA Approval
It is difficult to emphasize how important FHA approval is for a condo project in the United States. Since the collapse of our economy in 2007, lenders cut back on consumer lending practices, especially as it relates to condominiums. The availability of low downpayment conventional loans dried up resulting in a financing gap in affordability. This gap could only be bridged by FHA government back loans. FHA loans allow buyers to put down 3.5% of the purchase price and take advantage of low mortgage interest rates.
It is estimated that since 2008 more than 50% of all condo purchases in the United States have used FHA backed loans. In my experience in Nashville, the percentage may not be as high, but a great many buyers, especially first time purchasers, have taken advantage of FHA mortgages.
Status of 5th & Main Condos
Since the November 5th condo auction, ACG has sold or put 64 new units under contract. Added to the 9 condos sold prior to the auction, this number represents 57% of the 129 total units onsite. Of the 64 units sold by ACG, 18 have already closed. With FHA approval, I would expect the remaining 46 condos to all close by the end of February. Current pricing is 38.2% less than current estimated replacement cost, but this shall not last.
Effect on 5th & Main Condo Pricing
There is little doubt that the owners of 5th & Main will begin to push condo pricing for their unsold inventory. I would suspect an immediate increase in the 4-6% range plus an incremental increase for every additional condo sold. This is very good news for those who have already contracted a condo in this building, your investment just paid a dividend.
If you have not already contracted a condo in 5th & Main, but were considering doing so in the near future, I advise you to waste no time. I have sold several of these units and know the building better than any other broker. Call, text or email me ASAP and I’ll work extremely hard to negotiate base pricing with closing incentives on the best remaining units. Now is your chance to jump in on the ground floor and starting building equity in your investment!
Grant Hammond, Broker, ABR, SFR
Call or text: 615-945-7123
See all condos listed for sale in 5th and Main