Tuesday, August 15, 2006

Kamikaze Condo Converters?

"In California, the condo slowdown has been particularly pronounced in San Diego and the Central Valley, where rapid urbanization attracted a number of investors who are now rethinking their strategies, according to Michael Carliner, an economist with the National Association of Home Builders."

Or not...

"Homebuyers may be turning sour on condominium conversions in a cooling real estate market, but five Sacramento County apartment owners are pressing for still more. They're seeking approval for 700 new conversions."

"The moves seem to fly in the face of lagging buyer enthusiasm nationally for apartments converted to for-sale condo units. Locally, some apartment owners who won conversion rights have held back on sales plans, while others who went forward have seen slow sales. From Florida to Folsom, some owners of conversion projects have begun a reverse trend of converting condos back to rentals."

"But investors from Los Angeles and the Bay Area say they're pressing ahead in Sacramento County, even though buyers already can pick from an abundant supply of new condos and sales incentives. These apartment owners hope to compete on price in an expensive market, and say if they falter now they'll be poised for the region's inevitable housing rebound later..."

"Apartment owners converted about 2,500 capital-area apartments to condominiums during the housing boom, according to real estate company CB Richard Ellis. Homebuilders, meanwhile, have sold nearly 5,000 new condos in the region since December 2003. With new condos representing at least 26 percent of new home sales so far this year, according to the Folsom-based Gregory Group, conversions from existing apartments are often a second choice for buyers. Experts call condo conversions a sign that real estate markets are peaking."

5 comments:

"Hunter" said...

My compliments to a great blog! Man I thought it was bad in Los Angeles. Sacto housing supply just grew way too quick and when I have visted over the last couple years I was amazed at the growth. There were no new real industries, but you had giant home building ventures like those in North Sacramento. Are they going Kamikaze like the Condo converters? Or have they finished building out their off I-5?

Gwynster said...

I visited a Centex complex in Woodland and I couldn't get over how huge these places are! Who needs 3200 sqft house?
Almost everyone I saw looking at these properties was over the retirement age and I'm sure had no children at home.

Agent Bubble said...

Hunter--The new homes have exploded all over the map in and around Sacramento. I couldn't believe all the new homes out on Sunrise. I think it was called Annatolia or something like that.

Gary Anderson said...

What incredible greed of these investors. If the housing fall lasts for years, these guys will have driven out their renters, paid too much to charge a fair price to renters, and will have underestimated the crash. This is pure greed in my mind, and they could get seriously burned. Oh well.

Anonymous said...

Here come the lawsuits. Soon we'll see homeowners, who bought into condo complexes, suing the builders who can't sell the rest of their condos. Their only option is conversion.Everybody loses when the attorney gets his grimey hands on this one.