June Market Update - Included Condo's VS Townhomes

🏠 Real Estate Market Update | Week of June 21st

This week, Angie Gerber and mortgage expert Nikki from Kevnik Mortgage break down what's moving the market — and what every buyer, seller, and agent needs to know RIGHT NOW.

📉 What's in this episode:

• Oil prices drop to $73.50/barrel — what that means for interest rates
• Current rates sitting in the mid-6s (and how to get lower)
• CPI inflation numbers dropping Thursday — should you lock in NOW?
• Condo vs. Townhome financing: the difference that could make or break your deal
• How to tell if a property is a condo or townhome in Minnesota (hint: look for "lot and block")
• Why condos need 30–45 days to close vs. 2 weeks for townhomes
• HOA insurance changes from April and what they mean for your transaction
• Red flags to watch in association docs — before you list OR buy

📞 Connect with Nikki at Kevnik Mortgage:
📧 nikki@kevnickgroup.com
📱 952-484-1584
📲 @MortgagesfromMNtoAZ on Facebook, Instagram & TikTok

Transcript

Weekly Market Update Kickoff

SPEAKER_01 0:01

All right, everybody, welcome to your weekly market update. It's the week of June 21st, 22nd. And Nikki, how are you today? I'm on grandma duty today, as you can see.

SPEAKER_00 0:13

So we just got a little mascot today of it with us. But okay, so the market is actually doing really well right now because the oil prices have come down. They're down to $73.5 a barrel. So $73.50 a barrel, which is a huge decline from last month where they were averaging over 90. Why that's important for us in the market moving forward is because on Thursday, we're going to get CPI numbers which have to do with inflation and that's the, you know, what the Fed uses to determine whether or not they

Oil Drop And CPI Expectations

SPEAKER_00 0:45

will lower or increase that Fed interest rate. That's important, especially this month, because when we look at CPI numbers, they are actually for the prior month. And in this case, because oil was so high in May, those CPI numbers are going to be a little bit skewed for what the market is actually doing right now. We are still seeing interest rates into the mid-sixes right now. We can get into the lower sixes with a buy down, but we are averaging that mid-six range. And those and those numbers are actually holding strong. The volatility is at a minimum right now for that. So that's really good news. The other thing that is going to be important is when on Thursday, when those CPI numbers come out, they're expected to see the increase of inflation by about 0.2 with those numbers. But it could be the case that the market just ignores it because they know that the market has changed so significantly this month with the oil prices and the peace deal that's happening with Iran. So it'll be interesting to see what happens this week. But if you have clients that are getting new purchase agreements or offering on homes, just a little reminder to them to talk to their lender this week and make sure that they're locking in ahead of the inflation numbers if they can, because we don't want any surprises in the market from that standpoint. With that being said, I want to talk a little bit about condo versus town home financing. This is a huge topic. I know that we talk about condos all the time because it is such a huge issue to get condos approved through Fannie, Freddie, FHA,

Mortgage Rates And Locking Advice

SPEAKER_00 2:10

VA, and the like. There's different processes, different procedures. I want to more specifically focus on the difference between a condo and a townhome, why it's different from a lending purpose and why it's important when you're shopping with your clients for a condo or a townhome if they're open to both, why they might lean on one or the other. So from a from a lending standpoint, okay, so the different the main difference between a condo and a townhome is the land that is under said condo or townhome and the amenities. So when you're when you purchase a townhome, it is an attached property, you are purchasing the home and the land and all the um and any amenities that are in within the association, such as a pool or you know, pickleball courts or whatever those amenities are going to be, you have that is owned by the association. So you only own the actual home and the land. When you're talking about a condo, now depending on if it's a high-rise condo or a low rise condo, but with a condo, even though it might look like

Condo Vs Townhome Lending Basics

SPEAKER_00 3:10

a townhome and walk and talk and act like a townhome, with a condo, you own your property plus one 250th of the amenities. That's why condo is different than a than a townhome or a PU. When because with a condo owner, you have ownership over those amenities. So if there's 250 units, you owe a one, you own one 250th of those amenities. That's why with a condo, from a lending standpoint, we need to get into the budget of the association. We need to know that the reserves are there. We need to understand the health of that association more so than we do with a townhome. With a townhome, there is no association dock review process at all because you're because it's the association that owns those amenities. So there's no risk to you as the buyer to have something happen where the association could force a foreclosure on you. So there's a huge difference then. That's the main difference with the condo lending and the townhome lending. The big in some cities, in some states, it can be really hard to tell whether a property is a condo or a townhome, um, whether it's zoned as that. In Minnesota, it's extremely easy to tell. In Minnesota, if it has in the legal description, if it has a lot and a block, it is a townhome. If it has CIC or anything other than a lot and block, it's a condo. So that's the easiest way to tell in Minnesota. In Arizona, it's not that cut and dry. In Arizona, the legal description may or may not include a lot and block, and may or may not include an association reference, and may or may not include a condo reference. So in that case, the biggest, most, I guess, influential piece that you can get is to look at the property tax statement for that most recent year and see how it's zoned. And if you do have any questions, you can always call the city or the county in which the property is located and ask them if it's a condo or a townhome. So that's important. Lastly, is the amount of time we need for closing. On a townhome, it acts and acts like a single family residence from a lending standpoint. So therefore, we are able to complete the lending process relatively easy in as little as two weeks, depending on how long the appraisal is going to take. With a condo, we need at least 30 days. That condo approval process takes up to two weeks to get done. And if there's any issues or anything we need to go back to or clarify with insurance, etc., that's going to be going to take some time. So with a condo, 30 days minimum, preferably 45 with a townhome, two weeks to 30 days is just fine.

SPEAKER_01 5:38

So well, I can say I have never had it explained so clearly before. There you go. Amazing. Because I, yeah, I mean, and now you know where to go to be able to tell. And I'm in Minnesota, so it all makes absolute sense. But I just wrote down and I mean, I was like, block, lock, lock, I got it.

How To Confirm Property Type

SPEAKER_01 6:01

Amazing.

SPEAKER_00 6:02

Thank you. Absolutely. Absolutely. I know there's always this confusion. And I had, you know, brought up the discussion because I had a couple clients this weekend looking at townhomes and condos, you know, just looking at properties that they wanted to purchase. And, you know, the realtor was kept on asking me, why do you need to know if it's a condo or townhome? Why do you need to know? Why do you need to know? And I'm like, because it's important for lending, it's important for closing dates, it's important for commitment dates, you know, things on my side that I know that need to get done before before closing so that everyone's, you know, kind of set at ease with the lending process.

SPEAKER_01 6:32

Yes. So as an agent, and now I can say because it's a condo, we're gonna need at least 30 days. We could look at a little bit less. I mean, if you can give 30 days, you always do, I say honor before. Honor before then it's just nice for your lending flexibility. Yeah, absolutely. Absolutely. Has there ever been a case with the townhome? And I know you said there's no association dock review because there's no part ownership of the amenities. Is that always 100% or have can I say that with certainty, or should I put like an asterisk?

SPEAKER_00 7:07

Well, the only asterisk would be the insurance, the master policy insurance, and making sure that the they meet the roof replacement or either the replacement cost coverage on the roof or the actual cost on the roof. Remember, there was that change to requirements and insurance. That change back in April affected not only contos but town homes as well. Because as a reminder, still with the master insurance policy on a town home, it does cover the the outside of the home, including the roof. So there is that insurance review, but there's no budget review, there's no HOA docs review, things of that nature.

SPEAKER_01 7:40

Okay. So if we're about looking at town homes, and I know in the description

Closing Timelines And Approval Delays

SPEAKER_01 7:45

it says roof is either eight years or less, or more than eight years, is that anything that I should be looking at or that has nothing to do with the lending process.

SPEAKER_00 7:55

That has everything to do with what the insurance looks like. Okay. You know, so you know, with the insurance, it needs to have either a hundred percent replacement cost on the roof, including the roof, or it needs to it can have actual cash value replacement. In other words, they will replace what the roof costs, not guaranteed 100%. Either one is now acceptable with the change in April.

SPEAKER_01 8:20

Very nice. Yes.

SPEAKER_00 8:24

Well, we have been up, down, and sideways with that one, haven't we?

SPEAKER_01 8:28

Yes, and I'm sure there's people listening, agents out here, that I just I just remembered when it went into effect last year. It's just like all of a sudden January happened, and then I listed that town or that condo in April or February and sold it, and then it just never closed because of this. And it's all the sudden like you, I didn't even know this had happened. So, as agents, I guess, besides this call, obviously, because this call is amazing and you have so much information. Where would we go or how would I have looked back?

SPEAKER_00 9:03

Because I always try to learn from my mistakes to be able to find that information or the biggest thing that you can do if you're gonna be listing a townhome or a condo, I mean not a townhome, but if you're gonna be listing a condo, get those association docs full package up front and send them over to your lender and have them look for any sort of

Master Insurance And Roof Coverage

SPEAKER_00 9:20

issues because there's minimum requirements. I could go into a whole list of minimum requirements we need to see on each one. But the reality is that you know, if you have a listing that's coming up and you want to make sure that it is approved for cut, you know, lending, etc., some of those big red flags we I should be able to tell right away. I'm no expert, but I should be able to tell right away that there might be some bigger issues. But, you know, obviously everything is subject to review by you know the lender, the individual lender when the buyer comes along. But it'd be good to get a set of eyes on it and make sure everything looks pretty healthy.

SPEAKER_01 9:52

Yeah. And I know even you said, and you're phenomenal at knowing all this and the ins and outs. You you said you could make a full-time job going to these associations and consulting them.

unknown 10:05

Yeah.

SPEAKER_01 10:06

Can you just touch base on that so that agents listening really understand what an association board is? And when we go to them and they're voting on like who that actually is, yeah. I think there's a misconception.

SPEAKER_00 10:16

Yeah, there's a huge misconception. And this goes along for condos and townhomes. So you have when you have an association with a condo or a townhome, the actual you have to set up a board, and the board of directors is the actual homeowners, voluntary homeowners. They have absolutely zero idea what it what it means to have conventional lending versus FHA lending from a budget standpoint, from an association standpoint, from a rural standpoint. They have no clue because they're just homeowners. You know, they aren't experts in any of this. So it's very advisable when they do get an association management company, is that most of HOAs will have an association management company. It's very advisable

Preventing Condo Deals From Collapsing

SPEAKER_00 10:55

that that management company understands what it takes to get a conventional or FHA or VA approved association and that they can relay that information effectively to the board members to talk through voting and what needs to happen. Unfortunately, there aren't a lot of association management companies that are well-versed in the lending side of things. So they don't relay that information. So when these votes are happening to lower the cost of insurance, and the only way to lower that cost is to completely cut out certain important parts of that insurance, that's a huge problem. That becomes a huge problem when it comes to lending. And in order for us to say to the association or even to the insurance company, hey, you don't have enough coverage, they can't just change the coverage. They have to go back to the board, the board has to go to the management company, the management company has to, you know, advise them, then they have to take their vote, and then they have to make the change. Most insurance companies, most insurance agents won't make a change midterm. In other words, if their insurance is June to June and this issue comes up in September, most insurance companies are saying we're not going to change it until it renews. And so therefore you have a longer wait time, or they have to switch insurance companies. So it can become a huge mess. So it's best that you, if you have a listing or something that's happening, number one, first and foremost, get the HOA docs and talk to your lender. Number two is a good indicator is look at past sales in the past three months within the association and see what the financing type was on those sales. If we're talking cash only, that's a problem. If you see conventional lending, great. If you see FHA lending, great. But most of the time, a good indicator is going to be sales in the last three to six months, and you'll be able to see what type of lending has been approved.

SPEAKER_01 12:42

I love it. So, and in this case, so like I started meeting with these sellers in October. Yeah, we didn't end up listening until February, and it was one of those where they would not review it until June.

HOA Boards And Why Votes Matter

SPEAKER_01 12:55

And this was all last year. Yeah. And so, yeah, and we couldn't wait. The buyer didn't want to wait, so it fell apart three weeks after they had moved out and were supposed to close. So, coming back around to that, back in October, when I first met with them, how could I best advise them at that point, knowing we weren't going to do anything till spring market? Could they have started going to their board meetings or is there homework? Absolutely. Okay.

SPEAKER_00 13:19

Yep. They could have started going to their board meetings. They could have, you know, that would be the biggest thing for them to do, would be to go to the board meetings and start bringing it up with the board members and have them look into it further. You know, it's interesting because, you know, my we own a we own investment properties in Arizona in this one particular association. And my husband is on the board for the association because of exactly what we're talking about today, is he has a special set of skills, special knowledge, being in the mortgage industry before that he was, you know, that he can bring to the board and be able to make sure that that particular condo complex is compliant from a lending standpoint and remains that way as well.

SPEAKER_01 13:58

Yeah. And if you find that that needle in a haystack of a board member, which I haven't, uh be very, very lucky and count your blessings because that's phenomenal. And that does not at least happen in my experience.

SPEAKER_00 14:12

And any buyer can consider being a board member in general. It doesn't take that much of a commitment. But if you're owning a home and a condo association, and you know, it's a good idea for you to at least attend the board meetings, if not become a board member. It's a like a volunteer position that requires once a month meetings, and then you get to know what's happening and make sure that, you know, and be cognizant and aware.

SPEAKER_01 14:31

Yes. And at the very least, if you're not going to do that, read the minutes, review what's happened, know what's happening in your association, and have the recent, you know, notes in like your possession and know where to go to get them if you don't have them. Because I know my sellers were completely disengaged and disconnected from their association completely. And so it was just a lot of dominoes that when the person fell, they they all went down.

SPEAKER_00 15:00

Exactly. Exactly. So yeah, definitely be aware of what you're buying, be aware of what's happening in your association, regardless. Like you said, at the very lend, at the very least, read the notes and then become really good friends with your lender. And so you can call them anytime and say, hey, this just came across the meeting minutes. Should I do I need to be concerned about this?

SPEAKER_01 15:16

Oh, yeah, very, very good point. I'm sure you have people that do that. Yes, Nikki, I do. Amazing resource. And yeah, so if you own a condo or a townhome or your investor on one, definitely stay on top of that. And if you don't have a fantastic lender partner like Nikki, she's available

What Sellers Can Do Early

SPEAKER_01 15:35

and you should have one because a direct extension of your business, and especially if that's part of you as a homeowner or an investor. And with that said, Nikki, how do they get a hold of you? Because everyone should get a hold of you.

SPEAKER_00 15:49

Awesome. Uh, you can find me on Facebook, Instagram, and TikTok at mortgages from Mn to A Z. You can uh email me at Nikki at Kevnikgroup.com or you can text or call me at 952-484-1584.

SPEAKER_01 16:03

Perfect. Wonderful. Well, as usual, amazing. I have notes. Uh, agents, we listen to this because this will help you when you're talking to your buyers, whether it's a condo or tom home, when you need at least two weeks, when you need 30 days, maybe more, all of this. All of this is stuff that we should know and be able to speak to. And yeah, we need to be the I guess expert in our field. Yes, and this is part of this. And this is why. My first line of defense. Yes, ma'am. And if not, have Nikki. Have Nikki in your back pocket on speed dial, like I do, because I tell you what, it's gotten me out of more not situations, but just quick answers. And she's quick and just helps me shine. So thank you once again, Nikki. Appreciate it. Absolutely. Absolutely. All right, we'll see you all next week. Bye, everyone.