** 6/20/2013 – I should note that since this article was written, Nolde Bakery began a sales effort of the remaining developer owned units. I had labelled Nolde as ‘avoid at all costs’ but that may no longer be the case. If the developer has made the commitment to sell the remaining units and a […]
Originally written February 2013 · updated June 2026.
As 2008 taught almost all of us, real estate is not guaranteed to appreciate. While we collectively reaped the benefits of sustained home price appreciation from 2000 – 2007, we never imagined a day when values would drop 30-40% in a 3 year span.
Lost in the pundit’s debate about who was at fault and why, is a much more subtle debate about how the rules of finance affected the ultimate outcome. The changes in lending practices and underwriting affected different segments in different ways. The changes in mortgage insurance, as an example, affected housing targeting newer families more than it did housing in mature neighborhoods. As another example, the removal from any ALT-A products (loan products for those with some credit ‘challenges’) decimated the affordable housing segment and largely stopped redevelopment in its path.
As it relates to condominiums, the removal of many loan products and shifting underwriting guidelines meant a change in several properties from the realm of ‘Warrantable’ to ‘non-Warrantable (for a more in depth of discussion of ‘Warrantable,’ see UNDERSTANDING LENDING). This shift meant that projects where conventional financing was available suddenly found themselves no longer eligible for FHA, Fannie Mae or Freddie Mac backed loans. Once people began to figure out that having no ability to get a loan themselves also meant that when selling, only cash buyers were the market. That is a BIG problem.
There is exactly one building I will still call out by name, because its issue is structural rather than fixable: Miller & Rhoads — 100+ residential units attached to a hotel, a configuration that has long made conventional, FHA, Fannie and Freddie financing extraordinarily difficult. If you see it for sale, think long and hard regardless of the price, and go in with cash-buyer expectations.
Beyond that, I am not going to publish a running ‘avoid’ list, because warrantability is a moving target. A building that is non-warrantable this year can be cleaned up the next — a developer sells through, the owner-occupant ratio flips, the reserve gets funded — and a building that is fine today can slip the other way. So the move is never to memorize a list. It is to ask for the current read before you write an offer. For the full concept, see warrantability: the word that decides whether a condo gets financed.
Overall, the issue of whether or not the project is ‘warrantable’ has largely replaced the more important issue of being well conceived/designed/constructed as the sole determinant of success or failure. Understanding the effects of financing on the entire process is integral to making a good and risk mitigating decision.
Defining the data correctly is 99% of the battle — and that is what your agent is for.
Rick
