Aging Buildings, Developer Disputes, High Rate Of Absentee Landlords, Underwater Owners, Scarce Buyers Leave Condo Conversions In Deep Trouble

In South Florida, The Miami Herald reports:

• Since 2003, when housing prices took off, more than 74,000 rental apartments were converted into condominiums in Miami-Dade and Broward counties, twice as many as the previous 50 years combined, according to state records of condo conversion applications. As the fallout from the housing collapse continues, the conversion market - largely a collection of aging garden-style complexes and dowdy mid-rise buildings - is shaping up as one of the biggest losers of the downturn. Most real estate analysts predict it will be the last submarket to recover since it is competing for scarce buyers with the swanky supply of new condos being marketed at cut-rate prices.

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• While almost all condos have faced plunging values, abysmal sales, high foreclosure rates and cash-strapped condo associations since the market took a dive two years ago, condo conversions have all those problems in the extreme, analysts said. Adding to their woes are aging buildings, developer disputes, high rates of absentee landlords and foreclosures of entire projects.

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• Grant Stern, a mortgage consultant in Bay Harbor Islands, who joined partners in converting an apartment building during the boom, estimates that between 10,000 and 20,000 units are severely underwater and at risk of being reverted to rentals. [One unit owner], for example, paid about $174,000 for a condo at the Mirassou conversion in Northwest Miami-Dade when the market was at its peak. Now similar units are being listed for about $50,000, he said.

For more, see Condo conversion values plummet farthest in housing bust.