This new policy mandates balcony inspections, causing a crisis for unprepared condo associations.
In case you didn’t know, California’s new law, the Senate Bill 326, is creating a crisis for condo owners. While many still believe their investment is safe and stable, the reality is that this new law is creating a seismic shift in the market, and being unaware could cost you tens of thousands of dollars. Let me explain how Senate Bill 326 is reshaping condo values and what you can do to navigate it successfully.
Why is this law a game-changer? The Senate Bill 326, known as the balcony inspection bill, isn’t just a minor regulation—it requires all condo buildings with wooden balconies or elevated walkways to undergo rigorous safety inspections by January 2025. While the goal is safety, the unintended financial consequences are massive.
The financing shutdown. The biggest shockwave has come from Fannie Mae and Freddie Mac. These agencies, which back most conventional mortgages, have announced they will NOT lend in buildings with critical repairs that are not already underway or funded. This means a building without a plan and a budget for repairs is essentially blacklisted from low-interest loans.
A two-tier market emerges. This has split the condo market in two. Compliant buildings with completed repairs are seeing stable prices and normal sales activity. Non-compliant buildings are facing a crisis. Buyers can only secure expensive non-conventional loans with rates as high as 8% to 9%, drastically increasing their monthly payments and forcing sellers to slash prices to compensate.
"It isn’t just a minor regulation—it requires all condo buildings with wooden balconies or elevated walkways to undergo rigorous safety inspections, resulting in massive financial consequences."
What does this mean for your investment? The data is clear: inventory is rising as more units in affected buildings hit the market. In Long Beach, there are more than 700 condos for sale, the highest number in five years. With only 150 to 200 selling each month, buyers have more leverage, and sellers must price aggressively. Special assessments for repairs can also deter buyers.
How to protect your equity. The most critical step is to get involved. Contact your HOA board immediately and ask about the status of the SB 326 inspection and any required repairs. Ensure there is a funded plan in place. This isn’t just about safety; it’s about protecting your ability to sell your property for its maximum value when the time comes.
Pro tips for condo owners. Savvy owners treat their condo as a long-term investment. Stay informed on HOA matters, vote for responsible budgeting, and understand that a well-maintained building is a valuable one. If you’re buying, your first question must be about the building’s SB 326 compliance. If you’re selling, transparency about the building’s status is key to a smooth transaction.
Navigating SB 326 doesn’t have to feel overwhelming. Staying informed and working with your HOA can protect your condo’s value and keep your future options open. If you have questions about your building’s compliance or would like advice on your next steps, feel free to call or text me at 562-316-2915 or email me at [email protected]. I’ll walk you through what this means for your investment and how to safeguard your equity.
