Buying a condo? Fannie Mae blacklist has 438 Southern California communities – San Bernardino Sun

This spring, Southern California first-time homebuyers looking for a so-called more affordable condo are in for some good news and some bad news.

The good news is inventories of available properties for sale have grown.

The bad news: Properties still tout the highest prices ever, with high interest rates and heavy competition for well-priced, clean properties.

The worst of the news though is mortgage giant Fannie Mae’s notorious do-not-lend “blacklist.” More on that later.

Let’s first drill down on the market fundamentals.

Inventory levels

Southern California condo listings are up 61.8% when comparing March 2025 to March 2024, according to Steven Thomas’ data from Reports on Housing. That’s 7,781 units compared with 4,809 last year.

Here’s how Reports on Housing breaks that down county by county, now versus then:

—Orange 1,284 compared with 792

—Los Angeles 2.462 compared with 1,586

—Riverside 1,570 compared with 986

—San Bernardino 644 compared with 430

—San Diego 1,821 compared with 1,015

Here’s a look at sales volume in February 2025 compared with 2024:

—Orange 596 vs. 546

—Los Angeles 647 vs. 658

—Riverside 358 vs. 322

—San Bernardino 182 vs. 163

—San Diego 596 vs.678

Now let’s talk about renting versus owning in this high-cost housing market.

Renters are entitled to a $14,600 standard deduction as a single tax filer. A married couple filing jointly is entitled to deduct $29,200. Renters do not participate in any property appreciation with their landlord, and rents, in general, are very expensive.

Appreciation: Let’s look at data from the California Regional Multiple Listing Service comparing Orange County’s median condo sales price of $710,000 in February 2025 to February 2023’s median sales price of $633,000. That meansowners saw a 10.2% property appreciation in two years.

Buying into a market with the highest prices ever: Data from CRMLS indicates the average price of an Orange County condo in February 2025 was $873,956. A year ago it was $745,882. Ouch.

High interest rates compared to three years ago: Rates are about the same as they were two years ago, in the mid- to high-6% range. Three years ago (March 17, 2022) the 30-year fixed rate was 4.16%.

Heavy competition: My first-time buyers are making an average of five offers before getting one accepted.

Fannie Mae’s blacklist

Condo complexes must meet Fannie Mae’s (or Freddie Mac’s) financial and operational stability standards.

If the complex doesn’t meet these standards, the complex lands on Fannie’s blacklist of condos. This means the borrower’s financing options are more limited. Freddie Mac has very similar guidelines but does not keep a blacklist.

Also see: How California’s FAIR Plan may save associations blacklisted by Fannie Mae

Here’s a look at the county breakdown of blacklisted properties

According to Fannie Mae’s March data, Orange County has 70 condo complexes blacklisted, Los Angeles County has 237; San Diego County 98, Riverside County 19 and San Bernardino County has 14.

Statewide, California has 685 condo complexes on the blacklist.

Nationwide, 5,191 condos were blacklisted. There are 150,000 condo complexes nationwide. That’s 3.5% of all condos.

Have your mortgage loan originator check ahead of writing an offer to see if your intended condo complex is Fannie or Freddie approved, or if it’s on the Fannie Mae blacklist.

There’s no need to spend money on an inspection and an appraisal, only to have your transaction blow up in the middle of escrow. If it’s a no-go, have your loan originator check whether the condo is VA or FHA approved.

If it’s on the unavailable list, then decide if you are willing to pay for a more expensive non-warrantable mortgage. Rates are generally 1%-1.5% higher. The minimum down payment is 20%.

You can also look at planned unit developments (PUDs) as a condo alternative. They are likely more expensive than a condo, but that will save you the headache of having to worry about whether your find is blacklisted or not.

PUDs are treated just like single family homes because the buyer owns the land under the property. That means no condo conditions to worry about.

For condos, the owners own the unit’s interior space only. The building is owned in common with others.

Here’s another reason to buy a PUD instead of a condo. Just because a condo isn’t blacklisted, it doesn’t mean it can’t be blacklisted later. If the financial and/or operational stability standards go below a certain threshold, the next owner won’t be able to get a conventional loan at some future date.