The result is that buildings once meant to be higher-profit condominiums are being converted across the nation’s largest cities into apartment complexes. The impact was originally seen half a year ago in places as diverse as Las Vegas to Miami. It also spread up the Northeast into cities like Washington: the owners of more than 6,000 condominium units there have decided in recent months to convert to rental apartment units, according to the New York Times. Many owners are waiting for the condo surplus to shrink back to normal levels.
While the worst of the housing market slump may have already hit -- some remain skeptical that it has -- the market for condominiums will continue to suffer. The condominium market is more prone to boom and bust cycles than the single-family home market, real estate experts told the New York Times, because condos attract more investors looking for quick profits instead of renters looking for a place to live.
This means that when things collapse, they collapse on a larger scale in the condominium market: Between November 2005 and November 2006, condo sales fell 13.6 percent, compared to a 10.7 percent drop in the single-family housing market. The amount of unsold condos – considered “inventory” – rose a little more than 38 percent versus just under 30 percent for the single-family property market. These statistics were quoted from National Association of Realtors recently by New York Times reporter Vikas Bajaj.
That eight percent means a greater number of condos are going empty versus the single-family housing market. For the high-stakes condominiums – which often require a larger investment and demand higher prices – the result is a lot of people who developed large properties that don't have enough draw to attract buyers.
For one of those developers, David Franco, who chose to cancel his development of a proposed 10-story condo in Washington, D.C., the market has currently reached its limit.
“The reality is not everything can make way for condos,” Franco told the New York Times.
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