As demand cools, condos revert back to rentals

Slowing housing market stems conversion of apartments to condominiums
MSNBC.com
Growing demand for rentals stems from many factors. Buyers are finding the market less affordable, leading to fewer sales and a greater pool of renters. And conversion of condos took rental inventory off the market. Now that demand for condos has cooled, conversions are slowing and in some instances, condos revert back to rentals.

“There was a huge craze,” said Larry Leitzman, a Tampa-based research and marketing coordinator at Grubb & Ellis, a national real estate agency. “Everybody was taking apartment buildings and converting them to condos. A lot of them are reeling them back in and taking the apartments that didn’t sell and converting them back to rentals.”

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Condo Conversion Fee Approved, Increased

By Harry Saltzgaver - Grunion Gazette - July 27, 2006
A controversial fee for those converting apartments to condominiums was approved Thursday by the city’s Planning Commission, but it still must clear final City Council approval.

The condo conversion fee first went to the Planning Commission on June 15. The concept was to charge about 1% of a condo’s purchase price to go into the city’s new Housing Trust Fund. But staff members said then that tracking sales of individual units would be very labor-intensive, and commissioners asked for a report about what other cities are doing to collect such fees.
The result was an either-or recommendation from staff members to the commission. One option was to charge a flat $4,000 fee for every unit whenever a property owner applies for a condominium conversion.

That approach didn’t take into account units that would sell for less than $400,000, though, and puts all of the burden on the original property owner, according to Patrick West, director of the Community Development Department.

Last Thursday, the Planning Commission bumped the percentage up to 1.5%, but added several exemptions, including conversions to create affordable housing (one of the goals of the Housing Trust Fund). Suzanne Frick, Planning and Building Department director, said only conversions begun after June 20 would be liable for the fee.
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SoCalMLS condo statistics...

Hello there,
Chun Liu here with Team WOWWHEE.com. Thanks for stopping by!

The following is statistics taken from SoCalMLS system, which primarily covers real estate from Whittier / Downey area down to Long Beach / Lakewood and into almost all of Orange County area such as Seal Beach and Huntington Beach and Newport Beach and so on. Properties from other cities not in the area are sometimes covered, but not extensively.

There are currently 7124 condominiums and lofts available in the system.
Another 1583 condominiums and lofts in escrow (pending).

That gives us approximately 4 1/2 months supply of inventory to sell (available divided by pendings) which is not too bad. We had lower numbers the previous few years when the market was hot, but this is certainly not a buyers' market numbers.

The ones that seem to be selling are the ones that are priced correctly and marketed properly. This is something that many of the sellers don't quite understand. The market continues to shift and twist and turn. The Realtors in the trenches know and understand this. The Realtors not doing this full time or not in the trenches may or may not know this.

Take a few moments to really understand the market by talking in depth with a trusted professional real estate consultant. The value that you will receive from this is that your property will sell while you watch the others flonder and envy you. It behoves you to find out what is happening in real estate and be up to the minute!

A Great Time to Buy Condos in Southern California

Condos are always the hottest price point in Southern California where prices are well above the national average. Although the number of units sold this May was down 11.7% from the number of units sold last May, prices are up. It may seem like prices are going down but that could be because in May of 2005, prices were rising at an annual rate of 24.9 percent. We are now seeing an increase of less than half that number.

Los Angeles County's median price in May was $509,000 for an annual increase of 10.9 percent. This is for both condos and single family residences. Orange County saw median home prices rise 7.6 percent.

Listings are staying on the market longer giving buyers a chance to take their time to shop and find just the right place for them. Many real estate agents are saying they expect the cooling off to last through the end of the year and the market to start an upward trend after that although rising interest rates will keep the market from reaching the extreme growth stage we saw last year.