Sunday, August 13, 2006
Condos Converting Back to Apartments
Condos Cool Off, Apartments Heat Up
"Home ownership has been relatively strong, but we're seeing the downturn now," says Celia Chen, director of housing research at Economy.com. "We've seen strong demand for housing that was only partly supported by underlying factors.
The rental market is in the sweet spot, says Michael Cohen, research strategist at Boston-based Property & Portfolio Research, an independent real estate research and advisory firm. "Vacancies are at 5.8% across the 54 major markets that we cover," he says. "That's the lowest they've been since the third quarter of 2001."
Cohen believes that trend will start to reverse as sales slow, which will in turn lead to converters returning units they had expected to sell as condos back to the rental market. High land prices, which in many markets have precluded construction of just about any property type other than condos, will also start to ease and facilitate rental development.