Will FHA suspension impact Palm Beach commercial real estate?

West Palm Beach commercial real estate broker Ed Kearney discusses possible implications of a recent suspension by the FHA on commercial real estate market.

The Federal Housing Administration suspended its 90-day flip rule, effective Feb. 1, 2010. Although the FHA deals with residential mortgages, the change could impact transactions involving commercial real estate, says West Palm Beach-based commercial real estate broker Ed Kearney of Kearney Commercial Group/ Sperry Van Ness.

Suspending the 90-Day, no-flip rule

The FHA’s anti-flip regulation was enacted to protect homebuyers from predatory practices. The 90-day period restricted the availability of FHA loans by making re-sales that occurred within that time period ineligible for FHA-insured mortgages.

Since the restriction was imposed, foreclosures have increased and inventories have risen of homes that could be sold but would not meet FHA-financing criteria. The recent suspension of the rule is expected to stimulate sales of the affected properties.

What could this change mean for commercial real estate in Palm Beach County? Commercial property such as offices and shopping centers are influenced by neighboring residential areas. Homes with curb appeal draw prospective homeowners who want to work and shop nearby, says Ed Kearney, managing partner of Kearney Commercial Group. Office and retail developers and investors look at home occupancy figures and other demographics when deciding where to build or invest.

A suspension of the 90-day rule could boost the number of homes being sold in a Palm Beach County community. The resulting closings could boost nearby businesses as new homeowners improve their properties and spend money in areas near their new neighborhoods, says Ed Kearney.

A rise in occupancy levels could also support nearby office properties as homeowners choose to work near where they live. That increase would support office rents and prices.

As with any rule change, the effect may not be seen immediately, but combined with a hoped-for upswing in the Palm Beach County economy, 2010 may be a better year for investors, sellers and landlords.

About Edward Kearney and Sperry Van Ness

Edward Kearney is managing director of Kearney Commercial Realty Inc./Sperry Van Ness with an extensive background in various aspects of commercial real estate including investment analysis, landlord and tenant representation, and property tax abatement. SVN is a leading national brokerage firm that markets commercial real estate properties to an investment and brokerage community of more than 100,000. Kearney welcomes investors, brokers, and others with an interest in the Florida commercial real estate market to contact him today by calling 561-616-6262, or visiting http://www.svnpalmbeach.com for more information about the services he provides.

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