Tucked away in South Florida's heartland, condo developers
in places like Kendall, Hialeah and Lauderhill are quietly suffering through
the tail end of the economic collapse. The numbers of inland condos greatly outnumber
the beach condominium towers of national media notoriety. While the towers were
reshaping the coastal skyline, developers were quietly buying up hundreds of
rental units inland to convert into condominiums.
The buying boom began around 2000 when developers saw the
advantage of converting rental units to condos. Such properties needed little
to no renovations and could be converted to saleable units easily. At the
height of the boom in 2003, lenders were on site, selling easy credit to renters,
while developers offered them first refusal for sale of the property. Approximately
25 percent of those renters decided to buy. In many cases, developers made no
changes to the units, simply flipping them over.
After the initial boom, the only conversion opportunities
remaining on the market needed repair or renovations, yet developers still saw
value in converting these properties, expecting values to continue rising. Unfortunately,
the flood of conversions created an over-supply on the market just as the credit
crunch was beginning to settle in.
When the market halted quite abruptly in 2006, there was
little to do. Some developers reacted quickly, selling low and offering free
upgrades and amenities. By 2008, those who failed to sell found their
inventories found they were worth only 60 to 75 percent of the purchase value.
These properties could not compete on the market against waterfront luxury
condos offered at bargain prices.
No one is certain how many distressed properties remain on
developers' inventories, but estimates are about 10,000 to 20,000. Units in the
middle of renovations sit empty because developers have no funds to complete
construction and no way to rent or sell the units.
Today, many completed condo conversions are being
re-converted into rentals. Developers have reconverted approximately 16,000
since the market crash and that number is growing. This has become the only way
for investors to recoup some of the investment in the properties.
As
it turns out, timing was a crucial factor in the success or failure of these
developers. Those who reacted swiftly when the market stalled were able to sell
some of the inventory and are weathering the down market by renting the unsold
inventory; but for those left with units under construction, there remains
little hope of a speedy recovery.
Welcome to the sunny side of life at BocaExpert.com,
your primary source for a Boca Raton home .
Choose from the many fine communities to find the perfect Downtown Boca
real estate opportunity.
The author of this article has chosen to make this article available with free reprint rights. Click here to copy this article.
Disclaimer: All information on this site is provided for informational purposes only! By no means is any
information presented herein intended to substitute for the advice provided to you by any health care or other professional
or organization.
