Mortgage financing for luxury condos is a dynamic landscape, and experts in the field must unravel the trends and challenges facing developers and purchasers.
Moderator Steve Ladurantaye, vice-president of content for Zonda, hosted Kelly Velasco, the national condo/strategy for Chase, and Christine Madrid, the west division builder director and senior loan officer for Movement Mortgage, for a discussion on mortgage trends for luxury condos. Their conversation occurred at Elevate in Miami in early December — an exclusive event hosted for the biggest names in the luxury high-rise market.
Ladurantaye asked the duo about the mortgage challenges developers face when getting ready to close.
“Currently, the biggest challenge facing developers is that many buyers were brought under contract when interest rates were lower,” Madrid said. “What’s happening now is developers want to keep these buyers in the game? They have to offer incentives. And that’s cutting into their profitability.”
“I think one of the biggest challenges for developers, especially coming from out of country, is going into unfamiliar markets,” Velasco said. “It will help if you hire external people familiar with that market as you enter that area.
“Kelly is right,” Madrid said. “Hiring an experienced sales and marketing team that has specifically done new construction is critical.”
Ladurantaye then flipped the discussion from a negative to a positive approach and asked Madrid and Velasco for their thoughts on successful projects and how they were achieved.
“The smart developers now understand that mortgage financing is critical to their success in the end,” Madrid said. “The successful developers have been working in a partnership with us from the very beginning.
The two were then asked how the purchasing landscape may change in the coming years.
“I think there’s a lot of expectations,” Velasco said. “We’ve heard a lot of discussion in the past two days here at Elevate about the luxury market and their desires. But there are a lot of first-time homebuyers who are educated in tech, and they also want that luxury experience with those kinds of cutting-edge amenities and can pay for them.”
“What I don’t think is going to change — I don’t think obtaining credit is going to get any easier,” Madrid said. “The underwrites will maintain the current standards, and rules won’t become more lenient. For developers, incorporating their best strategies is going to be critical.”
