During the massive condo boom in South Florida from 2003-2006, most attention focused on the 53,000 new condominiums constructed.
But that number was dwarfed by the 74,000 rental apartments converted into condos. That number amounted to twice the total for the previous 50 years combined, according to The Miami Herald.
The idea was for developers to buy the buildings, toss out the renters, convert the units into condos, and then sell them for a quick buck, usually to investors and speculators.
Now all those conversions are coming back to bite the participants. And experts say the condo conversion sector will be the last part of the market to rebound, because buyers can now get brand new condos at bargain prices.
``It's ugly out there. The conversion market is extremely dysfunctional,'' Constantine Scurtis, vice president of apartment management company The Lynd Co., tells The Herald.
“There were a lot of inexperienced developers that converted product that never should have been converted.''
Median prices for conversions are down by an estimated 60 to 75 percent since peaking, while home prices have dropped 50 to 60 percent, according to the Florida Association of Realtors.
South Florida isn’t the only place where condo conversions are falling into trouble.
The worst investment in the Las Vegas housing market over the past year was condo conversions, with values plunging 56 percent, Larry Murphy, president of SalesTraq, a housing research firm, told the Las Vegas Sun.
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