Condo Conversions a local issue? Yeah, right...
Washington Update from the National Association of Housing and Redevopment Officials Newsletter:
DC: Condo Conversions Depleting Affordable Stock?
Low interest rates and strong demand have driven investors and developers into a hyperactive pursuit of rental buildings that are then converted to condos. Property owners, the developers who convert the properties and new condo owners share in the profits of this real estate boom. Though new housing opportunities and an increased tax base are created with condo conversions, the effect of conversions on rental housing affordability is of concern to both advocates and city managers. They believe more policies are needed to increase development of affordable housing stock since the existing renters who can’t afford or don’t want to buy are being dislocated. (According to statistics quoted by both the Washington Post and the Federal Reserve Bank of Atlanta, close to 90% of rental tenants are displaced after conversions). The National Association of Realtors reports that on average, in 2004 a family needed 132.6 percent of its income to afford to buy a home. In the first quarter of 2005, that requirement is up to 132.9 percent.
It is likely that scarce affordable land and construction costs are driving the conversion craze. According to the Washington Post, in the DC region alone 5,000 apartments were converted to condos in 2003. By 2004, that number was 14,500. In the city of Alexandria, VA, a suburb just outside DC, the housing office is reporting a loss of over 2,400 rental apartments over the past two years – which represents 10 percent of the city’s rental stock. In one building conversion in Arlington, Va. – also near the Washington, DC line -- only 51 out of 521 units in a conversion were purchased by existing tenants.
Some believe the condo conversion movement is more a localized issue rather than a national trend. NAHRO would like to know whether condo conversions are an issue in your localities, and whether the conversions are affecting availability of affordable rental stock in your area. If you have some reactions, please send us your comments so we can formulate an appropriate response to the issue.
DC: Condo Conversions Depleting Affordable Stock?
Low interest rates and strong demand have driven investors and developers into a hyperactive pursuit of rental buildings that are then converted to condos. Property owners, the developers who convert the properties and new condo owners share in the profits of this real estate boom. Though new housing opportunities and an increased tax base are created with condo conversions, the effect of conversions on rental housing affordability is of concern to both advocates and city managers. They believe more policies are needed to increase development of affordable housing stock since the existing renters who can’t afford or don’t want to buy are being dislocated. (According to statistics quoted by both the Washington Post and the Federal Reserve Bank of Atlanta, close to 90% of rental tenants are displaced after conversions). The National Association of Realtors reports that on average, in 2004 a family needed 132.6 percent of its income to afford to buy a home. In the first quarter of 2005, that requirement is up to 132.9 percent.
It is likely that scarce affordable land and construction costs are driving the conversion craze. According to the Washington Post, in the DC region alone 5,000 apartments were converted to condos in 2003. By 2004, that number was 14,500. In the city of Alexandria, VA, a suburb just outside DC, the housing office is reporting a loss of over 2,400 rental apartments over the past two years – which represents 10 percent of the city’s rental stock. In one building conversion in Arlington, Va. – also near the Washington, DC line -- only 51 out of 521 units in a conversion were purchased by existing tenants.
Some believe the condo conversion movement is more a localized issue rather than a national trend. NAHRO would like to know whether condo conversions are an issue in your localities, and whether the conversions are affecting availability of affordable rental stock in your area. If you have some reactions, please send us your comments so we can formulate an appropriate response to the issue.
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